Commodity Futures Trading Commission (CFTC) Chairman Michael Selig told the House Agriculture Committee this week that the agency is deploying artificial intelligence (AI) and automated surveillance tools to police digital asset markets, prediction platforms, and traditional commodity derivatives. Lawmakers pressed him on suspected insider trading, staffing reductions, and the urgent need for crypto market structure legislation.
Microsoft AI Tools and Staff Cuts
Selig confirmed that the CFTC has authorized the use of Microsoft 365 Copilot across its workforce and is building new AI-driven surveillance systems to flag fraud, market manipulation, and insider trading. The agency’s headcount has dropped from 708 full-time employees at the end of fiscal year 2024 to approximately 543, a reduction of more than 20%. Selig defended the cuts, telling the panel the agency is running more efficiently than ever. However, Ranking Member Angie Craig of Minnesota pushed back directly, arguing the CFTC cannot adequately oversee digital commodity trading and prediction markets with staffing levels below what the first Trump administration had requested.
Polymarket Insider Trading Concerns
Multiple members questioned Selig about a pattern of well-timed trades on Polymarket, Kalshi, and other platforms tied to sensitive government actions. Rep. Jim McGovern of Massachusetts cited roughly $500 million in oil and equities futures placed just before President Trump posted on Truth Social that the U.S. had begun ceasefire talks with Iran. Rep. April McClain Delaney and others referenced a Reuters report that six newly created Polymarket accounts earned approximately $1.2 million betting that U.S. airstrikes on Iran would occur, with those accounts funded within 24 hours of the strikes. Selig reiterated a zero tolerance policy on insider trading but declined to confirm or deny whether the CFTC is investigating specific trades.
Bipartisan Support for the CLARITY Act
Selig expressed strong support for the CLARITY Act, bipartisan crypto market structure legislation advanced by the committee. He told members the bill is essential to end years of regulatory ambiguity that has pushed builders and innovators offshore. The CFTC and Securities and Exchange Commission (SEC) have already signed a joint interpretation clarifying which crypto assets qualify as securities and which as commodities, and entered a memorandum of understanding to coordinate surveillance and rulemaking.
Prediction Market Rules and DEX Risks
The agency issued an advance notice of proposed rulemaking in March 2025 seeking public comment on how to regulate event contracts. Selig told the committee the CFTC has not allowed contracts tied to war, terrorism, or assassination on its regulated platforms. Rep. Austin Scott of Georgia raised concerns about decentralized exchange (DEX) platforms such as Hyperliquid, which lists perpetual contracts on crude oil without segregated funds, market surveillance, or U.S. oversight. Selig said the CFTC is monitoring those offshore markets and wants to bring that activity back under domestic regulation.
Outlook
The hearing also covered payment stablecoins, tokenized collateral guidance, and obligations for U.S.-based blockchain developers. Committee Chairman GT Thompson said he will send a letter urging the White House to nominate qualified individuals to fill all four vacant commissioner seats on a bipartisan basis. The hearing record will remain open for 10 days.