Warren Questions CFTC’s Oversight of Crypto, Prediction Markets

Senator Elizabeth Warren on June 5 asked Commodity Futures Trading Commission Chair Michael Selig to provide records and explanations about the agency’s ability to police cryptocurrency platforms and prediction markets. Her letter cited staffing cuts, declining enforcement activity and reports of industry and political influence.

Warren requested communications between the CFTC and cryptocurrency firms and prediction market operators, information about employees placed on administrative leave following enforcement-related matters, and other documents she said are needed to assess the agency’s independence and authority.

The letter cited a roughly 25% reduction in CFTC staffing and a decline in enforcement actions. Prediction markets let users buy and sell contracts tied to outcomes of future events, such as elections or economic measures. Warren wrote, “As prediction markets balloon in size, and Congress advances legislation that threatens to loosen the guardrails on cryptocurrency, the CFTC’s reported capture by industry poses severe risks to American families and our economy.”

Warren also asked the agency to clarify its jurisdiction and rulemaking authority over prediction markets and digital assets. The request seeks records that could show the extent of contact between regulators and market participants.

The CFTC has filed lawsuits against multiple states over event contracts. The agency sued Arizona, Connecticut and Illinois after those states took actions against CFTC-registered designated contract markets, and later brought suits against New York, Wisconsin and Rhode Island. The CFTC argues federal law preempts state gambling restrictions for event contracts traded on federally regulated platforms.

The agency’s role in overseeing crypto has developed through coordination with the Securities and Exchange Commission. In March, the CFTC and the SEC signed a memorandum of understanding on market integrity and investor protection and issued joint guidance on how federal securities laws apply to certain crypto assets and transactions.

Warren asked the CFTC to explain recent declines in enforcement activity and to produce records that could illuminate any ties between market participants and government officials. The records request arrives while Congress is considering whether to expand the CFTC’s authority over digital assets and while the agency is asserting federal preemption over state actions related to event contracts.