‘This is nuts’: CFTC chair Selig grilled by lawmakers on prediction markets,  Hyperliquid, and staffing

Commodity Futures Trading Commission Chairman Michael Selig faced heat from lawmakers on how he plans to oversee prediction markets, as the agency vehemently asserts its jurisdiction over them, and whether the CFTC has the headcount to do it.

On Thursday, during a House Agriculture Committee hearing, which has jurisdiction over the CFTC, lawmakers pressed Selig on prediction markets, which have recently been scrutinized after contracts were created that allow people to bet on events such as predicting the death of Iran’s Supreme Leader Ayatollah Ali Khamenei, where one trade reportedly made about half a million dollars.

“This is nuts,” said Rep. Jim Costa, D-Calif., during the hearing. “Do you think this is what was intended?”

The CFTC has a broad statute, Selig said, while adding that the agency has an advanced notice of proposed rulemaking to figure out how to “address these new markets.”

“I don’t find that a satisfactory answer,” Costa said. “I don’t believe this is market innovation — that is profiting from tragedy, and I think we need to get more invested in detailed with where this is all going.”

In March, the CFTC released an advanced notice of proposed rulemaking on how exchanges should approach listing prediction market contracts. Prediction market platforms like Kalshi and Polymarket have surged in popularity in recent years, particularly after the 2024 U.S. presidential election cycle. Selig has asserted that the agency has “exclusive jurisdiction” despite pushback from states that say platforms are violating local gaming and gambling laws, particularly related to sports-related bets.

Decentralized perpetual futures exchange Hyperliquid, which recently came into the spotlight as non-crypto traders turned to the 24/7 market to gain exposure to oil investments, also raised eyebrows during the hearing.

Republican Rep. Austin Scott asked Selig about those oil contracts and how the CFTC can regulate them, given that they are offshore and so not under the agency’s jurisdiction.

Selig said he is monitoring those markets, adding that the goal is to “onshore those markets” to make them subject to U.S. regulations.

“If the volume that I’m seeing is correct, it has the potential to be detrimental to the U.S. consumer,” Scott warned.

Does the CFTC have enough people?

Lawmakers on both sides of the aisle also raised concerns about whether the CFTC has enough employees to take on not only prediction markets, but also crypto, as lawmakers have been working to pass broad digital asset legislation that would give the CFTC broader authority over the sector.

Whether the agency needs more funding has come up over the years. The CFTC’s sister agency, the Securities and Exchange Commission, has six times the number of staff as the CFTC. Former CFTC Chair Rostin Behnam has called for more funding at the agency, as well as President Donald Trump’s previous pick to run the agency, Brian Quintenz.

Top Democrat of the committee, Rep. Angie Craig, raised concern over the agency’s ability to police prediction markets, given that it may not have enough enforcement staff.

Selig said that the agency is “running more efficiently and effectively than ever before,” that the CFTC is hiring more staff, and also using artificial intelligence to surveil.

Craig also asked Selig to commit to not finalizing any new rules, given that he is the sole commissioner at the agency. The CFTC is supposed to have five commissioners with varying political affiliations, but Trump has not yet nominated people to fill those slots.

Selig says he looks forward to working with whoever Trump decides to nominate, but says the agency can’t slow down its rulemaking in the name of investor and consumer protections.

There is a lot on the CFTC’s plate, said House Agriculture Chair Glenn “GT” Thompson.

“I just want to make sure that if you find yourself in the future in a situation where the need for additional qualified staff emerges, that you will communicate that back to the committee,” he said.

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