The United States Commodity Futures Trading Commission (CFTC) has established a new Innovation Task Force aimed at building clear regulatory frameworks for emerging technologies operating within U.S. derivatives markets. The task force will focus on three primary areas: crypto and blockchain, artificial intelligence and autonomous systems, and prediction markets. The announcement signals the agency’s intent to position itself as a central regulator for next-generation financial technologies.
CFTC Chairman Michael Selig stated that establishing a clear regulatory framework for innovators working on the new frontier of finance would foster responsible innovation domestically and prevent American market participants from being sidelined. The task force will be led by Michael J. Passalacqua, Selig’s senior advisor. The body is also expected to coordinate with the Securities and Exchange Commission (SEC) and its own Crypto Task Force on shared innovation initiatives.
Passalacqua described the task force’s mission as providing clarity to builders by advancing the CFTC’s innovation agenda across crypto, artificial intelligence, and prediction markets. The new body builds on prior work conducted by the agency’s Innovation Advisory Committee. Its formation reflects a broader effort by the CFTC to modernize its regulatory approach ahead of rapid technological change in financial markets.
Much of the CFTC’s recent activity has centered on prediction markets, which have grown quickly and attracted significant scrutiny. The agency recently published guidance for registered exchanges on compliance and product requirements for event contracts, which are used on platforms such as Kalshi and Polymarket. The CFTC is also soliciting public comment on whether existing rules governing prediction market oversight need to be amended or replaced entirely.
Pressure on prediction markets has intensified, with Democratic lawmakers raising concerns about insider trading and the existence of event contracts tied to sensitive subjects such as terrorism and war. In response, both Kalshi and Polymarket announced steps on the same day to address insider trading on their platforms. Kalshi introduced preemptive screening to prevent politicians and individuals working in sports from trading on markets related to their own activities, while Polymarket updated its market integrity terms to clarify its insider trading rules.
The CFTC has also faced jurisdictional challenges from individual states. Chairman Selig warned those contesting the agency’s authority over prediction markets, including state governments, that the CFTC would pursue the matter in court. Arizona filed charges against Kalshi, alleging the company was operating an illegal gambling business, while Nevada secured a temporary ban preventing Kalshi from offering sports, politics, and entertainment event contracts in the state for a minimum of 14 days.
Earlier in March, the CFTC signed a memorandum of understanding with Major League Baseball, committing both parties to work together to limit markets that could pose integrity risks. Separately, the agency issued a significant ruling allowing self-custodial wallet Phantom to provide its users with access to derivatives markets without requiring the company to register as a broker. These actions collectively illustrate the CFTC’s expanding regulatory footprint across both traditional and emerging financial sectors.
Originally reported by Decrypt.
