CFTC Chair Selig Says Agency Ready to Oversee Entire Crypto Market as CLARITY Act Stalls

Commodity Futures Trading Commission (CFTC) Chairman Michael Selig stated on April 1, 2026 that the agency is prepared to take responsibility for the $3 trillion cryptocurrency market and reiterated its exclusive jurisdiction over prediction markets, as the Senate continues to deliberate the stalled CLARITY Act market structure bill.

Selig’s comments marked his first 100 days since being confirmed by the Senate in December 2025, during which the CFTC has adopted policies signaling a softer enforcement approach to digital assets compared to previous administrations.

CFTC Claims Exclusive Jurisdiction over Prediction Markets amid State-Level Legal Challenges

Selig asserted that the CFTC has “exclusive jurisdiction” over prediction markets under the Commodity Exchange Act and threatened legal action against any challenges to its authority. The agency’s enforcement director, David Miller, stated at a Tuesday event that event contracts on prediction markets are “swaps” falling under CFTC purview rather than “gaming” subject to state gambling laws.

The CFTC’s position has been contested by multiple states. Arizona Attorney General Kris Mayes filed 20 criminal charges against Kalshi, alleging the platform operates an illegal gambling business. Nevada secured a temporary restraining order banning Kalshi from offering event contracts in the state, with other states including Massachusetts signaling potential similar actions. Selig expressed surprise at the state-level lawsuits, stating he believes the agency’s jurisdiction is clear and criticizing what he described as states “regulating by litigation.”

Selig warned that failure to establish clear policies around prediction markets could lead to an FTX-style collapse, arguing that pushing these products offshore into unregulated space creates risks similar to those seen in previous crypto firm implosions. The CFTC has issued an Advanced Notice of Proposed Rulemaking inviting public comments on prediction market regulations and launched an Innovation Task Force to coordinate with the SEC and other federal agencies on AI, crypto, and prediction market frameworks.

CLARITY Act Stalled as CFTC and SEC Coordinate on Digital Asset Oversight

The CLARITY Act, a crypto market structure bill that would clarify jurisdiction between the CFTC and SEC, has been stalled in the Senate amid discussions over stablecoin yield and other provisions. Selig stated that the same regulatory clarity being delivered to the crypto industry is being developed for prediction markets, which he described as powerful tools for information discovery.

Under Selig’s leadership, the CFTC has adopted policies signaling a shift away from the previous administration’s enforcement-heavy approach. In March 2026, the agency announced a memorandum of understanding with the Securities and Exchange Commission to coordinate on regulation, including digital assets. While early drafts of the market structure bill suggested the legislation could give the CFTC additional authority, the SEC is expected to continue regulating cryptocurrencies it considers to be securities.

Insider Trading Concerns Prompt Regulatory Scrutiny of Prediction Markets

Prediction market platforms including Kalshi and Polymarket have faced accusations of insider trading, with suspicious trades identified on contracts related to military actions in Iran and Venezuela. In February, two Israelis were arrested and charged with misusing classified information, allegedly using military secrets to profit on Polymarket. A video editor for MrBeast was fined and suspended after profiting from inside information related to the YouTube personality’s videos.

Some lawmakers have proposed legislation to ban elected officials with insider information from profiting from event contracts. Both Kalshi and Polymarket have recently introduced new policies and procedures to address insider trading concerns.

The surge in prediction market volumes has exceeded $20 billion monthly, with Kalshi reportedly doubling its valuation earlier in March 2026 after raising $1 billion at a $22 billion valuation. Selig emphasized the need for proper regulation to protect investors and customers while facilitating fair markets with real guardrails and rules.

FAQ

What authority does the CFTC claim over prediction markets?

CFTC Chairman Michael Selig asserts that the agency has exclusive jurisdiction over prediction markets under the Commodity Exchange Act, classifying event contracts as “swaps” rather than “gaming” subject to state gambling laws. The agency has threatened legal action against any challenges to its authority.

What is the status of the CLARITY Act?

The CLARITY Act, a crypto market structure bill that would clarify jurisdiction between the CFTC and SEC, remains stalled in the Senate amid discussions over stablecoin yield and other provisions. The CFTC has continued to develop regulatory frameworks for digital assets and prediction markets while the legislation remains pending.

What actions have states taken against prediction markets?

Arizona filed 20 criminal charges against Kalshi alleging illegal gambling operations. Nevada secured a temporary restraining order banning Kalshi from offering event contracts in the state. Massachusetts and other states have signaled potential similar actions, creating a jurisdictional conflict between state gambling laws and the CFTC’s claimed exclusive authority over prediction markets.