U.S. regulatory agencies lay off 20% of staff, then turn around to have AI approve crypto company registrations?

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Author: CoinDesk

Translation: Deep潮 TechFlow

Deep潮 Guide: Under the broader context of the Trump administration cutting federal staff, after the CFTC laid off 20% of its employees, not only did it not slow down, but it also adopted AI tools to handle registration approvals and trading monitoring. This means that compliance processes for crypto companies in the U.S. could become faster and more stringent—machines will directly reject non-compliant materials but can also flag issues more quickly. For projects aiming to enter the U.S. market, automated approval is both an opportunity and a challenge.

The U.S. Commodity Futures Trading Commission (CFTC), after reducing more than one-fifth of its staff, is turning to artificial intelligence to fill the manpower gap, Chairman Mike Selig said in an interview with CoinDesk.

Selig plans to attend the Consensus 2026 conference in Miami next week. He said that AI and automation can compensate for the staff reductions under President Trump’s plan to cut federal personnel. He stated that this agency, which is about to become the main regulator for the U.S. crypto industry, is pushing to use this technology to review registration applications and even assist in market surveillance.

Currently, CFTC’s registration process relies on manual submission of documents, Selig said, “so we are building systems to automate this, making the process more efficient.” “AI tools can be used to review applications, flag certain issues for staff, make their work easier, speed up their feedback, and also reject some inherently incomplete submissions,” he said. “We can see if submitted materials have blanks, insufficient descriptions, or obvious errors; AI can identify these and then reject the applications or put them in a queue.”

Selig said his staff are currently undergoing their first training on using Microsoft Copilot, but the agency is also developing some “internal” tools, “for reviewing swap data, market monitoring; we now have tools to help us draw conclusions about certain trades, etc. So we are embracing technology.”

The chairman has been leading the U.S. derivatives regulator for four months, during which the agency has entered the emerging technology arena, including regulation of cryptocurrencies and prediction markets.

Crypto Asset Classification

Even though Congress has yet to pass new crypto legislation, one of Selig’s main initiatives is to accept regulation of the industry. To this end, he said the most important step so far has been jointly issuing guidelines with the Securities and Exchange Commission (SEC) to create a “classification system” for digital assets—a definitional framework explaining how each crypto subset will fit within regulatory jurisdiction.

“This is a major step forward that will allow market participants, software developers, and consumers to confidently use crypto systems and assets without worrying about violating securities laws,” he said, although this interpretive guidance has not yet had full enforceable policy status. “Now we have clarity,” he added. “We understand what the CFTC’s responsibilities are, and we will take action against fraud, manipulation, and insider trading in the crypto markets. We believe this will have a huge impact, and it also provides clarity for consumers and users of this asset class.”

Prediction Markets

But his exploration into prediction markets— involving companies like Kalshi, Polymarket, Crypto.com, Coinbase, and Gemini—has been the most directly controversial. Selig insists that the CFTC is the only relevant regulator for these companies, which puts him at odds with states that have accused these firms of violating state gambling laws—especially in the sports betting sector. He has sued multiple states, most recently New York, to defend the agency’s “exclusive jurisdiction.”

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 Venezuelan military operations he was involved in. Gannon Ken Van Dyke, a sergeant in the Army Green Berets, was arrested and charged with using classified government information and fraud, along with the CFTC’s lawsuit over insider trading.

“We are paying attention and continuing to follow the news,” Selig said regarding his agency’s stance on enforcement in prediction markets. “We will take action against bad actors in our markets, and we take this very seriously. This is not just talk; market participants should be alert.”