CFTC’s Ex-Leaders Doubt It Can Juggle Crypto, Prediction Markets

The Commodity Futures Trading Commission is going through one of the biggest upheavals in its 50-year history as it takes on prediction markets and braces for a new role as crypto cop, but those efforts will fall short without more cash or personnel, agency veterans say.

Trump-appointed Chairman Michael Selig, currently the agency’s sole commissioner while the other four seats remain vacant, has emphatically sought to assert the CFTC’s exclusive jurisdiction over prediction markets, bringing lawsuits against states and their gambling regulators. The agency also stands to solidify its role as crypto’s main US watchdog under the CLARITY Act (H.R. 3633), digital asset market structure legislation that cleared a key hurdle in the Senate Banking Committee last week.

The Trump administration is seeking more money and a bigger headcount for the CFTC, but it has also lost scores of employees since last January during the president’s bid to slash the federal workforce.

“These departures included the loss of seasoned, senior, veteran lawyers and economists in key areas of the commission’s divisions responsible for licensing, supervision, oversight, and enforcement,” said former Democratic CFTC Commissioner Kristin Johnson, now a law professor at George Washington University.

The CFTC had 551 total staff at the end of March, as its headcount plummeted from 631 last September and 726 at the end of fiscal 2024, according to Office of Personnel Management data.

Despite collaborating with the larger Securities and Exchange Commission on token taxonomy and other crypto-related guidance, the CFTC will be largely left to its own devices when it comes to crypto rulemaking and enforcement under the measure advancing in Congress.

“The CFTC is going to be asked to do a lot more with the CLARITY Act enacted,” said Bill Walsh, a partner at Benesch, Friedlander, Coplan & Aronoff LLP who has represented clients in CFTC probes and served as senior enforcement counsel at financial derivatives exchange CME Group Inc. “The people that they lost in the last year and a half, both as a matter of headcount and expertise, puts them in kind of a tough spot.”

Responding to a request for comment, the CFTC cited Selig’s social media post following the Senate Banking Committee’s markup. “With a bright line between digital asset securities and commodities, clear rules of the road for digital asset transactions, and an end to regulation-by-enforcement, America will remain the global hub for crypto innovation for years to come,” he said.

‘Explosions of Their Jurisdiction’

Concerns about the CFTC’s headcount and budget are nothing new, as the commodity regulator has taken on new markets on several occasions over the decades.

“The CFTC’s jurisdiction was completely exploded in 2010 with Dodd-Frank, when swaps were brought under the CFTC’s jurisdiction, but its budget really didn’t keep pace,” said Aitan Goelman, a partner at Zuckerman Spaeder LLP and previously a CFTC Enforcement Division Director. “If you’re talking about making the CFTC the national gambling regulator, and also the preeminent national crypto regulator, you’re talking about two additional explosions of their jurisdiction.”

Timothy Massad, who ran the agency during its expansion into swaps market oversight under the Obama administration, said he “didn’t feel that we had the resources to fulfill all our responsibilities under the law.”

“Adding crypto and prediction markets to the CFTC’s mandate means adding big, retail markets that are very challenging to oversee,” said Massad, who’s now a Harvard Kennedy School of Government research fellow.

That doesn’t mean the agency will shy away entirely from policing bad actors in prediction markets or crypto trading. Selig in March tapped David Miller to lead the agency’s enforcement unit, touting his background prosecuting insider trading as an assistant US attorney in the Southern District of New York.

Miller’s “first public address made clear that he believes that the Enforcement Division’s mandate is to affirmatively police the derivatives markets to combat insider trading, market manipulation, and market abuse,” said Charu Chandrasekhar, a partner at Debevoise & Plimpton LLP and a former SEC enforcement lawyer.

But “as a practical matter, the CFTC’s ability to do so will come down to a question of resources,” she said.

Flying Solo

The Trump administration requested $410 million for the CFTC in fiscal 2027, with a staffing target of 650 full-time equivalents and a proposal to collect user fees to offset the total requested appropriation, similar to the SEC’s model. The White House also said it would propose legislation to give the CFTC that authority.

But fee funding pitches have failed to gain traction in previous attempts, and the GOP-led Congress is unlikely to approve a major cash boost for the regulator.

“I don’t see us providing the money to” staff up, said Sen. Adam Schiff (D-Calif.), a member of the Senate Agriculture Committee who’s introduced legislating targeting prediction markets, at a May 12 Brookings Institution event. “The majority right now seems all too pliant when it comes to industry and deregulation, and one way to deregulate is simply not have the staff to enforce the regulations that are even on the books.”

The USAJobs website for the CFTC listed just eight open positions at the agency as of late last week, two of which were student volunteer roles.

“Maybe if you’re the sole commissioner you can do things faster, but I think the overall quality of regulation suffers as does the reputation of the agency,” Massad said. “Unfortunately, we are in an era where financial regulation has become much more politicized, and that’s not good for our markets.”

The CFTC could still turn to self-regulatory organizations to handle the heavy lifting on certain enforcement and oversight matters, with several crypto industry entities emerging as possible trade groups that would provide the framework for a new SRO, according to Walsh. But that won’t make up for shortcomings at the federal agency itself.

“I get it that the CFTC wants to encourage innovation, but you’re also constantly playing catch-up then if you’re the regulator,” Goelman said.