CFTC Deploys Microsoft AI to Monitor Crypto, Markets

CFTC Chairman Michael Selig told the House Agriculture Committee this week that the agency is deploying Microsoft 365 Copilot and new AI-driven surveillance tools to monitor crypto markets, prediction platforms and traditional commodity derivatives as it investigates suspected insider trading and market manipulation.

The commission has authorized Microsoft 365 Copilot across its workforce and is building automated systems designed to flag fraud, manipulation and insider trading in digital assets, event contracts on prediction markets and commodity futures. Members of the committee questioned the agency about a pattern of well-timed trades tied to sensitive government actions.

Lawmakers described several trades that prompted concern. Six newly created accounts on a prediction market reportedly earned about $1.2 million betting that U.S. airstrikes would occur hours before a February 28 action. Separately, roughly $500 million in oil and equities futures trades were placed shortly before a March 23 social media post about ceasefire talks.

Selig reiterated the commission’s ‘zero tolerance policy on insider trading’ but declined to confirm or deny whether specific trades are the subject of active investigations, saying doing so could jeopardize enforcement efforts. He noted the enforcement division is actively adding personnel under its new chief, David Miller.

The panel also pressed the agency on staffing. Full-time headcount dropped from 708 at the end of fiscal 2024 to about 543, a reduction of more than 20 percent. Selig, sworn in roughly 100 days before the hearing, defended the staffing changes as part of efficiency efforts. Ranking Member Angie Craig said the agency cannot adequately police fast-moving digital markets with the current staffing levels; Selig is the only sitting commissioner and four seats remain vacant.

On legislation, Selig urged Congress to pass the bipartisan CLARITY Act and send it to the president’s desk in 2025 to clarify crypto market structure. He pointed to a joint interpretation from the CFTC and the SEC that distinguishes which crypto tokens qualify as securities and which qualify as commodities, and to a memorandum of understanding the agencies signed to coordinate surveillance, information sharing and rulemaking.

The commission opened rulemaking on prediction markets with an advance notice of proposed rulemaking in March 2025 seeking public comment on how event contracts should be regulated on registered exchanges. Selig told the committee the CFTC has not permitted contracts tied to war, terrorism or assassination on regulated platforms, but he would not pre-judge the outcome of the rulemaking. Some members raised concerns that certain prediction contracts could conflict with state and tribal gaming compacts.

Lawmakers also raised issues with offshore decentralized exchanges that list perpetual contracts on commodities such as crude oil without segregated customer funds, formal market surveillance or U.S. oversight. One member cited platforms where order volumes may reach as high as 200,000 orders per second and suggested such trading could affect domestic gasoline prices. The commission said it is monitoring offshore activity and seeks to bring more trading under U.S. regulation.

Separately, the agency has issued guidance on capital treatment for payment stablecoins, provided direction on tokenized collateral and outlined supervisory responsibilities for U.S.-based software developers building on blockchain infrastructure. Selig said statutory language would lock those protections against future administrative changes.

The hearing also covered rising fertilizer costs, the implications of 24-hour trading models for agricultural contracts, the funding stability of the CFTC whistleblower program and requests to codify existing no-action letters that exempt some church pension plans and university endowments from commodity pool operator registration. Committee Chairman GT Thompson and Ranking Member Angie Craig said they will ask the White House to nominate qualified candidates to fill the four vacant commissioner seats. The hearing record will remain open for 10 days.