Crypto, Prediction Market Chiefs Gain Sway as CFTC Advisers

New CFTC Chairman Michael Selig is deepening his small agency’s reliance on crypto, prediction market, and trading exchange executives by forming a panel of industry bigwigs, even as the Trump administration slashes advisory committees across the federal government.

In one of his first official moves since taking office, Selig this month announced he’s tapping Polymarket founder Shayne Coplan, Gemini Space Station Inc. CEO Tyler Winklevoss, and other industry chiefs to serve as charter members of an Innovation Advisory Committee.

“The creation of the new advisory committee gives you a great sense of Mike Selig’s priorities as chairman,” said Cheryl Isaac, a partner at K&L Gates LLP who counsels derivatives market participants on regulatory matters.

Advisory committees have long allowed the Commodity Futures Trading Commission and other agencies to solicit policy recommendations from subject matter experts and industry representatives. Selig said he’ll round out the latest panel with public interest representatives and academics, as required for membership balance under the Federal Advisory Committee Act.

But Selig’s committee stands out, populated with the heads of companies that have pending business before the CFTC as it stands to gain vast new authority over digital assets and weighs its role policing prediction markets.

The advisers are poised to have a direct line to Selig, especially while he remains the agency’s sole leader with the four other commissioner spots vacant.

The initial tranche of members on the new advisory committee will also include leaders from traditional exchanges such as Nasdaq Inc. and Cboe Global Markets Inc. who were previously named to the CEO Innovation Council under former acting Chairman Caroline Pham. Proposals for additional nominees are due by the end of January.

“He’s taking some of the leading CEOs of companies registered with the CFTC, and he’s able to now draw upon their expertise,” said J. Christopher Giancarlo, senior counsel at Willkie Farr & Gallagher LLP who served as CFTC chairman during President Donald Trump’s first term.

The CFTC declined to comment.

CFTC’s Full Plate

House-passed crypto market structure legislation, now awaiting markup in the Senate, would put the CFTC front and center overseeing digital assets, including exchanges run by the new committee members.

The Senate Agriculture Committee’s version of the legislation includes language intended to boost the CFTC’s resources by directing it to regularly collect fees from digital commodity brokers, dealers, and exchanges, along with digital asset custodians.

“The jurisdiction of the CFTC will be laid out pretty explicitly in a market structure bill,” Isaac said.

In the meantime, the advisory committee will provide a forum for Selig to engage with industries under the CFTC’s growing jurisdiction, including prediction markets that let people bet on the outcome of elections, sporting events, and more.

“The inclusion of prediction markets in the CFTC’s innovation architecture is a clear statement that the agency intends to treat event contracts as a legitimate market-structure category within its federal remit, not as a novelty to be tolerated until the states shut it down,” said Braeden Anderson, a partner at Gesmer Updegrove LLP who advises financial services firms on regulatory compliance.

Kalshi Inc., whose CEO Tarek Mansour is among the charter nominees for the committee, could soon be banned from operating its sports prediction market in Massachusetts, after a judge last week granted the state attorney general an injunction to halt the platform’s sports wagering.

In that case, Kalshi had argued that complying with state law would pose challenges, harm its users, or put its CFTC registration at risk.

“I would not frame Selig as ‘pro-Kalshi’ in any cheerleading sense, but I also would not assume he will shy away from defending the CFTC’s institutional lane,” Anderson said. “Everyone is looking to Selig to provide backbone here.”

Some companies represented on the advisory committee have already enjoyed an inside track at the CFTC.

Pham last year pressed rank-and-file staff to accelerate their review of applications from Gemini and Polymarket after some companies appealed to her office directly, Bloomberg News reported.

On Selig’s committee, those firms and others regulated by the CFTC or seeking the agency’s blessing will now have another avenue to make their voices heard.

“In the decentralized finance space, I think it would be really valuable for folks in that industry to have a seat at the table,” Isaac said.

Inviting Industry

The Trump administration formally terminated about 15% of federal advisory committees across the government as of Sept. 30, according to a Bloomberg Law analysis, raising concerns that regulatory decisions will fall to political appointees lacking input from critical stakeholders.

In some cases, however, new or existing panels can present a different concern: that their advice is too heavily weighted in industry’s favor.

The House Financial Services Committee last week approved a measure (H.R. 6967) that would create a Public Company Advisory Committee at the Securities and Exchange Commission composed entirely of corporate executives and professional advisers, prompting objections from ranking member Maxine Waters (D-Calif.) that the panel “excludes the very people the SEC is tasked with protecting.”

Unlike the proposed SEC panel, the CFTC’s must meet FACA requirements to balance the perspectives of members advising on regulatory matters.

It’s ultimately up to Selig to decide how his committee fits into his broader plan to “future-proof the CFTC for tomorrow’s innovations.”

“The role of an advisory committee really depends on what the chairman wants out of it,” said Timothy Massad, who led the CFTC during the Obama administration. “It can simply be a way to engage with market participants, give the appearance you’re engaging with market participants, or it could be a vehicle to actually get ideas and develop policy.”