Next Stops – Crypto, Compute Markets, and Prediction Markets

CFTC Chairman’s Bold Move: Next Stops – Crypto, Compute Markets, and Prediction Markets

Foresight News特邀专栏作者
2026-08-21 03:30
This article is about 4751 words, reading the full article takes about 7 minutes
CFTC Chairman Stands Firm: If the CLARITY Act Stalls, We’ll Step In and Set the Rules Ourselves.
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• Key Takeaway: CFTC Chairman Selig unveiled a “New Financial Frontier Roadmap,” planning to use existing authority to regulate crypto assets if congressional legislation stalls, while bringing AI compute markets and prediction markets under the derivatives regulatory framework to drive innovation into a regulated market system.
• Key Elements:
  1. The CFTC is prioritizing congressional passage of the CLARITY Act to define crypto regulatory boundaries. If it stalls, the agency will activate “Plan B,” exploring designating existing or unregistered crypto exchanges as special DCMs to offer compliant leveraged trading.
  2. CFTC staff have begun engaging with developers of on-chain financial protocols to explore ways to offer these protocols legally and compliantly in the U.S., bringing DeFi into regulatory design discussions.
  3. On AI, the CFTC has partnered with the U.S. Department of Commerce to issue a Request for Comment on Compute Markets, aiming to develop GPU compute capacity into a futures and derivatives market that can be priced and hedged.
  4. On prediction markets, the CFTC has proposed amending Rule 40.11 to clarify the definition of “gaming” and redesign the data reporting framework for fully collateralized event contracts, replacing the interim “no-action letters.”
  5. Going forward, Parts 38 and 40 will be amended to update DCM core principles for event contracts, with a focus on retail protection, product governance, and market design.
  6. During the meeting, the CME CEO and a Kalshi representative engaged in a heated debate over prediction market manipulation, underscoring the urgency of regulatory rulemaking.

Written & Compiled by KarenZ, Foresight News

Over a hundred years ago, when futures trading first emerged, it was also labeled “gambling” by American politicians.

Now, CFTC Chairman Michael S. Selig has pulled that history back into the spotlight.

On August 20, local time in the U.S., at the inaugural meeting of the U.S. Commodity Futures Trading Commission’s (CFTC) Innovation Advisory Committee (IAC), Selig devoted considerable time to reviewing the history of the futures market: 19th-century commodity exchanges faced crackdowns from state “anti-gambling” laws, and commodity options were also restricted for extended periods. Ultimately, however, the United States chose to establish a unified federal regulatory framework, allowing new financial products to develop under clear rules.

Selig’s point is not complicated: in his view, the current debates surrounding Crypto, artificial intelligence, and prediction markets are nothing entirely new. The real question regulators need to answer is not just “whether to allow innovation,” but how to bring innovation into a market framework that can be regulated.

Accordingly, at this meeting, Selig unveiled for the first time a relatively comprehensive version of what he calls his “Roadmap for the New Frontier of Finance.”

The roadmap has three main pillars: Crypto, the AI compute market, and prediction markets.

Among these, the signal with the greatest impact on the crypto industry is this: Selig still views congressional passage of crypto market structure legislation as the preferred path, but he made clear that if such legislation continues to stall, the CFTC is prepared to study the use of its existing statutory authority to establish a regulatory framework for crypto asset markets.

Track One: If CLARITY Continues to Stall, the CFTC Is Prepared to Act with Existing Authority First

Crypto constitutes the strongest policy signal in this address.

Selig began by reaffirming Project Crypto, which the CFTC is advancing jointly with the SEC.

In January of this year, the SEC and CFTC upgraded Project Crypto—originally spearheaded by the SEC—into a joint initiative between the two regulators, aiming to resolve a core issue that has long plagued the U.S. crypto industry: which crypto assets qualify as securities, which do not, and where the regulatory boundaries between the SEC and CFTC lie.

However, for Selig, administrative agency interpretations are not enough.

In his remarks, he still regards congressional passage of crypto asset market structure legislation as the more important and more durable solution, explicitly referencing the CLARITY Act.

One of the core purposes of the CLARITY Act is to further delineate the regulatory boundaries between the SEC and CFTC over digital asset markets through legislation, and to establish a statutory regulatory framework for the relevant markets.

What truly deserves attention is the “Plan B” Selig outlined afterward.

He stated that if CLARITY ultimately continues to stall, the CFTC will leverage its existing authority to begin establishing a regulatory framework for crypto asset markets. To that end, he has directed CFTC staff to begin studying rulemaking options.

According to Selig’s described vision, this framework could potentially allow existing CFTC registrants, as well as currently unregistered crypto exchanges, to be designated by the CFTC as a special type of Designated Contract Market (DCM)—namely, a so-called “Crypto Asset Market.”

These markets could then offer leveraged or margin-based crypto asset trading under CFTC oversight and specially designed rules.

The word “could” here is very important. Selig’s exact words were that staff have begun exploring rules, and that the relevant framework could enable such arrangements. Therefore, this should not yet be interpreted as “the CFTC has approved crypto exchanges converting to DCMs,” nor as an already-effective market access regime.

Beyond this, Selig also revealed another area of work relevant to the DeFi industry: he has directed CFTC staff to engage directly with developers of onchain finance protocols, studying how developers can offer such protocols in the U.S. in a lawful and compliant manner.

This also does not provide specific exemption standards or regulatory conditions, but it at least signals that when the CFTC next discusses crypto regulation, its scope is not limited to centralized trading venues like Coinbase and Kraken—onchain finance protocol developers have also been brought into the conversation on regulatory framework design.

Track Two: Turning GPU Compute into a Market That Can Be Priced and Hedged

Compared to crypto, Selig’s approach to AI is notably different.

The CFTC is not responsible for regulating AI models themselves. What Selig is focused on is another asset underpinning AI: compute.

As demand for high-performance GPUs grows for large model training and inference, compute has become one of the most critical factors of production for AI enterprises.

Selig’s assessment is that as compute becomes increasingly scarce and economically valuable, demand will emerge for spot, forward, and derivatives markets built around compute.

In simple terms: companies purchasing compute today often face issues of price volatility, long-term supply, and redevelops in the future, it could achieve price discovery like energy or other commodity markets, while enabling risk management through forwards and derivatives

Selig noted that the CFTC has already partnered with the U.S. Department of Commerce and, one week prior to this address, issued a request for comment on compute markets. The next step will be to study a relevant regulatory framework based on market feedback.

This means that what the CFTC calls “AI regulation”—at least for now—does not equate to regulating large language models themselves. For a derivatives regulator, the more direct entry point is: once compute becomes a priceable, tradable, and hedgeable economic re

Track Three: Prediction Markets Are No Longer Just a “Should We Allow Them” Question—the CFTC Is Now Discussing “How to Regulate Them”

Following the rapid growth of platforms like Polymarket and Kalshi, a long-standing question has become increasingly acute: do event contracts related to sports, politics, and other areas fall under federally regulated commodity derivatives, or should they be subject to state gambling regulations?

Selig’s stance in this address was very clear.

His position is that Congress has granted the CFTC exclusive regulatory authority over commodity derivatives on designated contract markets (DCMs); as long as they qualify as legitimate derivatives, the CFTC will continue to defend this federal regulatory authority, including defending its jurisdiction in court.

At the same time, however, he acknowledged that the CFTC has historically never established a sufficiently comprehensive regulatory framework for event contracts that addresses their specific risks.

Notably, Selig did not simplify the roadmap for prediction markets into simply “opening them up.” Instead, he laid out a fairly concrete regulatory agenda in his remarks.

First, the CFTC has proposed amendments to Rule 40.11.

Under U.S. law, for certain categories of event contracts involving war, terrorism, assassination, gambling, and illegal activities, the CFTC may impose restrictions based on the public interest. However, the current regulations do not adequately define key concepts such as “gaming” or “involve,” nor do they establish a complete public interest determination standard.

Selig said that the new Rule 40.11 proposed by the CFTC in June of this year is intended to make these standards more specific and to establish a contract-by-contract review mechanism.

Second, the CFTC has proposed redesigning the data reporting regime for fully collateralized event contracts. In the past, some event contracts have long relied on regulatory “no-action letters” to address reporting obligations. In June of this year, the CFTC proposed a new regulatory approach, aiming to convert this temporary arrangement into a formal, uniform reporting system.

Third, and more noteworthy for the next phase: Selig stated that he expects the CFTC to soon propose a series of amendments to CFTC Regulations Part 38 and Part 40, in order to update the DCM core principles and product listing rules applicable to event contracts.

Of particular note, he explicitly mentioned retail consumer protection, product governance, market design, and incentive programs.

This suggests that the CFTC’s current policy direction on prediction markets is not simply debating “whether prediction markets are gambling,” but is moving into a more specific second phase: if they are treated as regulated financial markets, what listing, governance, reporting, and consumer protection rules should exchanges be required to follow?

The Most Heated Moment of the Meeting Also Occurred Around Prediction Markets

Compared to AI, the atmosphere around prediction markets was far more contentious—and that divergence erupted directly at the meeting.

CME Group Chairman and CEO Terry Duffy first made clear he is a strong supporter of the crypto market (supporting it since 2017 and being the first to list crypto futures on CME), and he also took a positive view of AI applications in risk management. However, when the conversation turned to prediction markets, his tone became extremely harsh.

Duffy unsparingly pointed out the current disorder in prediction markets, citing contracts like the “Maduro contract” (related to political events) and the “teleprompter situation,” arguing that such products clearly present opportunities for manipulation. He added that some sports event contracts are not just outcome-based but also involve individual performance, making them susceptible to human interference. Listing easily manipulated contracts, he argued, damages the entire industry’s reputation and runs counter to President Trump’s goal of “making America the crypto capital.”

Selig directly interrupted Duffy, pointing out that the contracts he cited were not listed within the United States but on overseas platforms.

Kalshi co-founder Luana Lopes Lara then fired back directly: “Since we’ve been called out, I’d like to ask—has CME ever had any market manipulation issues in its history?”

Duffy did not back down: “If you want to debate, I’m happy to. But I have more people in my regulatory department than you have in your entire company.”

Lara retorted: “Then maybe you should learn something about efficiency.”

Duffy delivered a final devastating comeback: “Then maybe you should learn something about what makes a credible market.”

This exchange actually helps explain precisely why the CFTC is amending its rules. What prediction markets truly need to address is which events are suitable as contract underlyings, what product review responsibilities exchanges should bear, how to monitor market manipulation and information advantages, and what protections retail users should receive.

What Did This Inaugural Meeting Actually Establish?

The CFTC’s Innovation Advisory Committee itself is responsible for advising the CFTC on issues at the intersection of technology, law, policy, and finance. The views of committee members do not automatically represent the CFTC, nor do they become effective regulations simply because of a single meeting discussion.

The IAC’s current membership spans both crypto and traditional financial markets, including Coinbase, Uniswap Labs, Ripple, Kraken, Gemini, Solana Labs, Chainlink Labs, Polymarket, and Kalshi, as well as heads of institutions such as CME Group, Nasdaq, Cboe, ICE, DTCC, Franklin Templeton, and Robinhood.

But when this meeting is viewed alongside Selig’s remarks, it at least makes clearer what the CFTC intends to do next:

For crypto assets, the priority remains waiting for Congress to establish market structure, while simultaneously preparing to study the use of existing authority to establish the CFTC’s own crypto market rules; for AI, the effort is to develop compute into a new commodity market with price discovery and risk hedging functions; for prediction markets, the direction is to build a more systematic set of rules around event contract admission, data reporting, market oversight, and consumer protection.

These three initiatives may appear quite different, but the CFTC’s regulatory approach is actually consistent.

Selig repeatedly returned to one point in his speech: when financial innovation emerges, rather than waiting for controversies to dissipate, it is better to establish market operating rules as early as possible.

So, what is truly worth watching from this inaugural IAC meeting is this: as the underlying assets of the next generation of financial markets become crypto markets, compute markets, and prediction markets, how should the existing commodity and derivatives regulatory framework be extended to cover them?

Judging from Selig’s roadmap, the CFTC has already decided to get to work.

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