US Regulatory Agencies Cut 20% of Staff, Then Turn to AI to Approve Crypto Firm Registrations?
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US Regulatory Agencies Cut 20% of Staff, Then Turn to AI to Approve Crypto Firm Registrations?
Regulatory agency chair Mike Selig stated that the agency is exploring new technologies to expand its capabilities amid staff reductions, including using artificial intelligence to monitor trading data.
Navigating Web3 tides with focused insightsAuthor: CoinDesk
Translation & Editing: TechFlow
TechFlow Intro: Amid the Trump administration’s broad federal workforce reductions, the Commodity Futures Trading Commission (CFTC) has cut 20% of its staff—but rather than slowing down, it is deploying AI tools to handle registration approvals and trading surveillance. For crypto firms seeking U.S. market access, this means compliance processes may become both faster and stricter: machines will automatically reject incomplete or noncompliant submissions, yet also flag issues more rapidly. Automation thus presents both opportunity and challenge for projects aiming to enter the U.S. market.
The U.S. Commodity Futures Trading Commission (CFTC) is turning to artificial intelligence to offset staffing losses exceeding one-fifth of its workforce, CFTC Chairman Mike Selig told CoinDesk in an interview.
Selig plans to attend Consensus 2026 in Miami next week. He said AI and automation can compensate for personnel cuts under President Trump’s federal workforce reduction initiative. He added that the agency—poised to become the primary U.S. regulator for the crypto industry—is actively advancing the use of these technologies to review registration applications and even assist with market surveillance.
CFTC’s current registration process relies on manual document submission, Selig said, “so we’re building systems to automate it and make the process more efficient.” “AI tools can be used to review applications, flag certain items for staff, ease their workload, accelerate feedback, and outright reject substantively incomplete submissions,” he explained. “We can detect blank fields, insufficient descriptions, or obvious errors in submitted materials—and AI can identify those, then either reject the applications outright or relegate them to the back of the queue.”
Selig said his staff are currently undergoing their first training sessions on Microsoft Copilot, but the agency is also developing several “in-house” tools “for reviewing swap data and market surveillance; we already have tools that help us draw conclusions on certain trades, for example. So we’re embracing technology.”
The chairman has led the U.S. derivatives regulator for four months, during which the agency has swiftly entered the race to regulate emerging technologies—including cryptocurrencies and prediction markets.
Digital Asset Classification
Even as Congress has yet to pass new crypto legislation, one of Selig’s top priorities has been asserting regulatory authority over the industry. To that end, he said the most significant step taken so far has been jointly issuing guidance with the Securities and Exchange Commission (SEC) to establish a “classification framework” for digital assets—a definitional system clarifying how each crypto subcategory fits within respective regulatory jurisdictions.
“This is a major step forward that will allow market participants, software developers, and consumers to use crypto systems and assets confidently—without fear of violating securities laws,” he said, though this interpretive guidance does not yet carry the full force of permanent policy. “We now have clarity,” he added. “We understand the CFTC’s responsibilities, and we will act decisively against fraud, manipulation, and insider trading in crypto markets. We believe this will have a substantial impact—and further provide clarity for consumers and users of this asset class.”
Prediction Markets
Yet his push into prediction markets—encompassing firms such as Kalshi, Polymarket, Crypto.com, Coinbase, and Gemini—has drawn the most direct controversy. Selig maintains that the CFTC is the sole relevant regulator for these companies, putting him at odds with multiple states that accuse them of violating state gambling laws—particularly in sports betting. He has sued several states, most recently New York, to defend the agency’s claimed “exclusive jurisdiction.”
Later last week, the CFTC joined the Department of Justice in a lawsuit against a U.S. Army Special Forces soldier accused of placing bets on prediction markets related to his involvement in a Venezuelan military operation. Sergeant First Class Gannon Ken Van Dyke, a member of the Army’s elite Green Berets, was arrested and charged with using classified government information and fraud; the CFTC separately filed charges against him for insider trading.
“We’re watching—and continuing to watch—the news,” Selig said when asked about the agency’s enforcement stance on prediction markets. “We will act against bad actors in our markets, and we take this extremely seriously. This isn’t just talk—market participants should take note.”
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