Michael Selig, the newly sworn-in chair of the Commodity Futures Trading Commission (CFTC), is facing immediate and significant challenges as he steps into an agency grappling with legal battles, crypto-related chaos, and an exploding prediction market industry. The CFTC, traditionally focused on regulating commodities like oil and wheat, now finds itself at the center of regulating event contracts and digital tokens, a role Congress has yet to fully define.
The agency's most pressing issue is the multibillion-dollar prediction market sector, which has grown exponentially since the COVID-19 pandemic and is projected to expand further in 2026. Platforms like Kalshi (regulated by the CFTC) and Polymarket allow users to place bets on real-world events, from political outcomes to economic indicators. Currently, over 90% of Kalshi's trading volume is in sports betting, an area the CFTC has largely avoided regulating. Selig's stance is pivotal; as a former attorney at Willkie Farr & Gallagher, he previously opposed the Biden-era CFTC's efforts to limit such markets.
Aaron Brogan, founder of Brogan Law, emphasized the regulatory pressure, stating, "It's going to be impossible for the CFTC to do nothing," pointing to un-cleared trades on Polymarket related to political events as a concern for potential insider trading. A CFTC spokesperson stated Selig is focused on "market integrity" and will consult with lawmakers before taking action, though any significant moves are expected to be slow.
Selig also faces a jurisdictional war with state regulators who argue that sports betting contracts constitute gambling and should fall under state, not federal, oversight. Companies like Crypto.com, Kalshi, and Robinhood are caught in this crossfire. Legal expert Elliott Stein from Bloomberg Intelligence suggests this conflict could escalate to the Supreme Court.
Internally, the CFTC is understaffed and reeling from recent turmoil. The agency has lost approximately 15% of its workforce, leaving it with only 540 employees. Former acting chair Caroline Pham departed in December 2025, and two senior officials were placed on leave after questioning the oversight of prediction markets. Liz Davis, a partner at Davis Wright Tremaine, highlighted resource constraints, comparing the current workload to the post-2008 financial crisis era.
Adding to the controversy are allegations of irregular exchange approvals under Pham's leadership. Applications from Gemini Space Station (founded by Tyler and Cameron Winklevoss) and Polymarket (where Donald Trump Jr. is an advisor) were reportedly fast-tracked, bypassing standard, months-long review processes. Peter Malyshev of Cadwalader noted that the surge in prediction markets and potential new crypto responsibilities could force the CFTC to expand its focus to protect retail investors—a "huge lift" for an agency unaccustomed to such a role.
Currently, Selig is the sole commissioner on a panel designed for five, operating with limited formal authority. The White House is working on a bipartisan slate of nominees, but no appointments have been finalized. As Alicia Crighton of Goldman Sachs, speaking for the Futures Industry Association (FIA), noted at a House hearing, "The diversity of expertise, the diversity of opinions, the durability of the policy that it will create, is incredibly important for safety and soundness."
