Michael Selig’s Nomination to Lead CFTC Advanced by Senate Committee

President Donald Trump’s nominee to lead the Commodity Futures Trading Commission, Michael Selig, pushed a deregulatory, crypto-forward vision at his Senate confirmation hearing on Wednesday. The Senate Agriculture Committee on Thursday advanced the nomination along party lines.

Though asked about several contentious questions facing the agency, including whether sports prediction markets are simply gambling and whether the under-resourced CFTC can actually handle the new powers Congress wants to give it, Selig mostly avoided answering them directly.

Appearing Wednesday before the Senate Committee on Agriculture, Nutrition, and Forestry, Selig repeatedly argued that the CFTC is the right and only regulator for spot digital commodity trading and said Congress must move quickly on digital asset market-structure legislation. He leaned heavily on his recent role as chief counsel to the Securities and Exchange Commission’s cryptocurrency task force, touting his work on modernizing federal rules to account for digital assets.

“We need clear, simple guidelines; we need consumer protection; and we need to stop the regulation by enforcement,” Selig told senators, warning that heavy-handed enforcement without clear rules is “pushing entrepreneurs offshore and smothering them in red tape.”

At the same time, he sidestepped providing direct answers as to how he would police some of the fastest-growing corners of that same digital asset ecosystem—and what it would take for the CFTC to do it safely.

‘Get the Agency Running Like a Business’

On cryptocurrency, Selig was clear that he wants the CFTC in the driver’s seat.

He told Senator John Boozman, R-Arkansas, the committee’s chair, that congressional efforts to give the CFTC spot authority over digital commodities represent a “critical opportunity” to bring clarity to markets that have grown from being a “curiosity to a nearly $4 trillion market.” He repeatedly praised the bipartisan Boozeman–Booker discussion draft on market structure as a needed framework that could allow “software developers to thrive” and bring “new exchanges” into a regulated perimeter.

Selig framed himself as a skeptic of what he called “massive over-regulation of the real-world economy,” saying that regulators have buried agricultural, energy and crypto market participants alike in “unwritten rules of the road”—staff lore, no-action letters and opaque interpretive guidance.

“If confirmed, my job is to get the agency running like a business,” he said, promising faster licensing, fewer bottlenecks and a shift from ad hoc enforcement to “common-sense, principles-based regulations” adopted in writing.

Pressed on decentralized finance and blockchain applications that may not fit traditional regulatory categories, Selig argued against a one-size-fits-all regime. Applying full financial intermediary rules to, for instance, “a video game app that runs on a blockchain,” he suggested, would be inappropriate. Instead, he said, regulators should focus on whether there is an actual operator or intermediary, and then tailor obligations to the specific product.

On some core safeguards, however, he tried to reassure skeptics. He called it “vitally important that we have a cop on the beat” in digital asset markets, invoking past blowups like that of FTX Trading Ltd. and vowing to prioritize segregation of customer funds, surveillance for fraud and manipulation, and robust examinations of platforms.

Facing Budget Challenges

Members of both parties repeatedly raised what they described as a basic reality: The CFTC has lost about 20% of its staff as part of federal layoffs early this year, operates on a much smaller budget than the SEC and currently has only one sitting commissioner.

Selig took a similar approach when asked about the agency’s missing commissioners. Under statute, the CFTC is a five-member bipartisan commission. At the moment, there is just one commissioner: Caroline Pham, a Republican, who is also serving as acting chair. However, Pham has said she would step down when a new commissioner is confirmed, leaving Selig as potentially the only sitting member and acting commissioner.

Yet Congress is contemplating giving the CFTC sweeping new authority over spot crypto markets with tens of billions in daily trading volume.

Senator Amy Klobuchar, D-Minnesota, warned that “I just don’t know how you keep doing what you’re doing now, 20% down on staff, and then a new mandate.”

Each time he was asked whether the agency needed more resources—including when Senator Raphael Warnock, D-Georgia, asked if he supported the extra $150 million for CFTC implementation included in the Boozeman–Booker draft—Selig fell back on the same response: He would “need to get in the seat” before making any decisions and did not want to “prejudge” the issue.

“I really want to understand the needs of the agency,” he told senators, even after being told there may be only “one or two people” at the CFTC with deep expertise dealing with digital assets.