"For the Purpose of Receiving Testimony from the Honorable Michael S. Selig

Or maybe eleven thirty. Oh, I need a ranking member yet.

All right.

Committee will come to order. Uh welcome and thank you for joining today's hearing where we will uh hear from Chairman Selig from the Commodity Futures Trading Commission and after brief opening remarks members will receive testimony from our witness today, and then the hearing will be open to questions. Um so once again good morning everybody and welcome to our first First hearing with Mike Selig, the Chairman of the Commodity Futures Trading Commission. Uh congratulations on your confirmation, Chairman. Uh we are looking forward to a robust conversation today about your agenda for CFTC. As we discussed at our reauthorization hearing in December, it is a transformative time for the Commission and for financial markets broadly. Commission has many new questions to grapple with, including the inte- integration of digital assets, and blockchains, uh increasing participation of retail customers, the growing prevalence of integrated business models, and harmonization of roles between financial regulators, just to name a few. Uh, as it does so, Congress gave CFTC an explicit statutory purpose to promote, quote, responsible innoven innovation, end quote. It is the only financial regulator with such a mandate. At the same time, the core mandate of the commission remains on changing to protect commodity markets and their participants with a system of effective self-regulation overseen by the Commission. That is why we know today a what we know today as a principle-based regulation. I look forward to Chairman providing us with his views on these many policy issues, as well as his plans for agency operations enforcement act priorities and re-reauthoring. While the rise in prediction markets has created an innovative new class of financial derivatives, it also has spawned significant confusion and debate about the role and the authority of the Commission. On the one hand, the Commodity Exchange Act is clear, the Commission's authority is broad and deep. The definitions of commodity and swap are sweeping, and the Commission's authority over transitions on registered exchanges is complete and exclusive.

As we

We uh learned from Doctor Sander Sandoir at our fiftieth anniversary hearing last year, the original framers of CFTC were intentional in providing the commission with broad definitions in a an exclusive jurisdiction. But understanding the commission's jurisdiction is not the end of the public policy questions that we must consider. Many members have raised important questions about the roles for trading event contracts and the appropriateness of certain contracts to be listed for Importantly, the Commission has sug- has significant tools currently at its disposal to address many of these concerns. Uh, the Chairman has already based issued has already issued guidance and is committed to uh insh- uh uh issuing a rulemaking using those tools. And I look forward to discussing those actions further today. Where the Commission's authority is found to be insufficient to meet its mandate, to support responsible and protect market participants, we will consider legislation as may be appropriate. But first, the committee must understand if such gaps exist. Today's hearing is another step in that process. The chairman's uh testimony will help our members to further understand the law and the commission's authorities. Production markets are important and newsworthy, however they are not the only issue before the commission. Uh, Chairman Selig's announced agenda for the

Thank you so much, Thank you so much, Mister Chairman, Mister Chairman, and thank you, and Thank you, Chairman Selig, Chairman Selig, for being here today. for being here today, We appreciate it. we appreciate it. I'm grateful for the chance to discuss the work of the I'm grateful for the chance to discuss the work of the Commodity Commodity Futures Trading Commission in the critical areas of consumer protection, market integrity, and the stability of our financial system. For fifty years, the CFTC has been the cop on the beat for America's derivatives markets, markets that touch everything from the price of groceries and gas, to how our farmers manage risk out in the field. But today, CFTC's responsibilities and markets have expanded and become more complex than ever, and that's just in the last Digital assets and prediction markets have opened new horizons and created new risks and we cannot expect the agency to keep up if Congress doesn't set the appropriate rules and regulations as well as give the CFTC the staffing, the funding, and the tools it needs to do its job well. Let me start with something that should be uncontroversial. The CFTC needs to be fully staffed. We are asking a relatively agency to oversee enormous technologically sophisticated markets that operate at the speed of light and in some quarters twenty-four hours a day. The agency's workforce is stretched too thin to meet the demands currently placed upon it. And without a sufficient staff, the CFTC simply cannot provide the rigorous oversight that consumers and market participants need. That includes having a full five commissioners in place. as Congress intended, to ensure that consumers come first and non-partisan norms are maintained without being tainted by unnecessary politics. That brings me to my second point. The CFTC needs full, stable funding. Just last year we heard from industry leaders and commercial end-users of traditional commodities markets farmers, ranchers, cooperatives, that stagnant or insufficient funding at the CFTC undermines market certainty and raises risks across the system. And that was before digital assets and event contracts contract markets exploded in use. Today, the CFTC is effectively the nation's primary regulator of two of the fastest growing and most volatile markets in the country digital commodity trading, and event-based prediction markets. These markets are global, complex, and technologically advanced. and can be accessed by bad actors using nothing more than a smartphone. The CFTC needs the tools, staff, and capacity to respond quickly in this new environment and to hold bad actors accountable. We've all watched the growth of event prediction platforms, where markets where people can wager on outcomes, ranging from March madness to geopolitical crises. In recent months we've even seen a insider trading on platforms like Polymarket and other offshore entities where individuals reportedly made enormous profits betting on political events, including a coup in Venezuela and the war in Iran. When people can gamble on war or political instability and potentially use non-public or sensitive information to do it, that crosses a red line. We also need a full review of whether these platforms violate local and state gaming laws, and keep in mind that you the unique role that tribal governments play in this space as well. This is exactly why we need strong rules, regulations, clear guardrails and consumer protections, and why we need the CFTC fully equipped to enforce these protections. Consumers operate in fast-moving digital assets markets, or prediction platforms do they deserve transparency, fairness, and safety. They deserve a referee who's on the field, not one sitting on the sidelines because Congress didn't fund the agency adequately. At the end of the day, protecting consumers and maintaining market integrity is not a partisan issue. It's not an industry issue either. It's a stability issue, a fairness issue, and frankly, a basic responsibility of this committee. So my message today is straightforward. If we want safe markets, if we want innovation without exploitation, if we want risk management tools that serve Main Street as well as Wall Street, then we must give the CFTC the staff, the funding, and the clear statutory authority it needs to do its job. And we need a CFTC committed to protecting consumers first. Again, I wanna thank Chairman Selig for being here today. I look forward to the discussion. And with that, Mr. Chairman, I yield back.

I thank the General Lady. Uh the Chair would have requested other members submit their opening statements for the record so our witness may begin his testimony ensure that there is ample time for questions. I'm pleased to welcome to the committee our witness for today CFTC Chairman Michael Selig. Chairman Selig, thank you for joining us. We will now proceed to your testimony. You'll have five minutes. The timer in front of you will count down to zero at which point your time has expired. Chairman Selig, please begin whenever you are ready.

Chairman Thompson, Ranking Member Craig, and members of the committee, thank you for the opportunity to testify here today. Just over a hundred days ago, I was sworn in as the sixteenth Chairman of the Commodity Futures Trading Commission. During my November confirmation hearing, I pledged to work tirelessly as Chairman to maintain the agency's stature as a world-class financial markets regulator. I committed to protect and provide regulatory relief to our farmers, ranchers and producers, roll back outdated rules, regulations and modernized the agency to keep pace with the rapid speed of innovation. I'm pleased to report I've made significant progress on these goals since rejoining the agency last December. One of my first priorities upon taking charge of the agency was identifying regulations to prevent farmers ranchers and producers from accessing our derivatives markets. My staff have been working diligently to right size cumbersome rules so that even our smallest producers can properly manage risk. I've also revived the agency's annual agriculture convention known as AgCon to bring together leaders from government, business, and academia to discuss the most pressing issues in our agricultural markets. Most importantly, I'll continue to visit with farmers, ranchers, and producers across the country to hear from them directly. The agriculture community is the backbone of this country, and it'll always have a seat at the table in this administration. Another key priority is to lower the compliance burdens and energy costs for small businesses. Many of our rules and regulations discourage for from servicing and trading with the businesses that are most in need of our markets. The agency is finalizing regulatory relief for firms that transact with energy, agriculture, and critical minerals producers to provide access to more market intermediaries and contribute to lower commodity prices. The agency has also taken a leading role in delivering on President Trump's mandate to make America the crypto capital of the world. Importantly, the CFTC joined an SEC interpretation to provide guidance that resolved significant ambiguity as to which types of crypto-assets are securities and which are commodities. We've also worked quickly to provide clarity concerning tokenized collateral, the capital treatment of payment stablecoins, and the obligations of software developers building in the United States. I applaud the important work of this committee to deliver bipartisan market structure legislation that will cement clear rules of the road for the millions of Americans who use crypto-assets each day. I'm optimistic that Congress will soon send this landmark letter to the Senate and the Senate will The agency's also working to provide explicit guidelines and further strengthen investor protections for prediction markets which offer trading and event contract derivatives that are regulated under the exclusive authority of the CFTC. Commission staff recently issued a prediction markets advisory and published notice soliciting public input before considering new regulations for these markets. Now, I'm sure I'll be getting questions about our enforcement efforts related to crypto prediction. So I want to be crystal clear to anyone who engages in fraud, manipulation, or insider trading in any of our markets, we will find you, and the full face force of the law will come to bear. Nothing is more important than protecting market integrity, and that's why I've been diligently working to reinvigorate our enforcement division, upgrade our surveillance tools, to meet the challenges of our growing markets. None of these accomplishments would have been possible within such a short period of time without the agency's talented and experienced career civil servants. I've also brought on new senior leadership who bring a wealth of experience to the agency. As Chairman, I believe it's vital to break from the restrictive regulatory practices of the past, and create derivatives markets that work for everyone. Under my leadership, the CFTC will administer fit-for-purpose regulation, appropriately tailored to material risks, no more and no less, to ensure

Well, Chairman, thank you so much for your testimony today. Uh, at this time, members will be recognized for questions in order of seniority. alternating between majority and minority members in order of arrival for those who joined after the hearing convened. Uh you'll be recognized for five minutes each in order to allow us for to get to as many questions as possible I'm gonna hold pretty firm to that five minutes cuz we have uh I guess a vote series uh before noon today for some reason um uh so I recognize myself for for five minutes.

Mm.

Chairman, crafting digital asset market structure legislation has been a long, thoughtful process for this committee over a number of years. In your testimony you expressed optimism that it will reach the President's desk. Uh where do you see the process on the Clarity Act in the Senate and how important is it uh in your estimation to get clarity done?

Thank you, Chairman. And as I said in my opening statement, I applaud the efforts of this committee and Congress to get bipartisan market structure legislation on the President's desk for signature. And I do believe that this is absolutely essential. We have had too much ambiguity in these markets for way too long. The crypto-asset community wants to build here in the United States, and they wanna develop technologies that are going to move our country forward, are going to promote innovation and market integrity. But they have to have solidified legislation on the books that will provide future-proof clarity for the markets. I am too concerned that if

Oh, thank you, Chairman. Uh,

Mm-hmm.

Chairman, the discussion around prediction markets feels a lot like the discussion around digital assets. several years ago. These markets are popular, they're newsy, and somewhat controversial. But unlike digital asset spot markets, there is a crucial difference. Unlike spot digital commodity trading, event contracts are already within the commission's jurisdiction. Nevertheless, there is a significant confusion here about the commission's authority here. Some stakeholders have described these markets as quote " unregulated gambling" or " a loophole". Uh, without

Well Congress wisely granted the CFTC very broad, exclusive jurisdiction over commodity derivatives markets and the Commodity Exchange Act or authorizing statute has a very broad definition of the term commodity if

Mm.

includes virtually everything except for onions and motion picture box office receipts, and we take that broad authority very seriously. When there are new creative instruments that are structured as derivatives, we of course have the authority to regulate those to the extent that the underlying asset is a commodity. And with that broad definition, that's a lot of things. And so we take this responsibility very seriously to police fraud, insider trading, and manipulation in the markets, and we are defending that authority in court. Uh, as I'm sure this committee's aware, we're involved in some active litigation Uh, so I can't speak to - to some of those matters, but rest assured that we will continue to defend the agency's authority to make sure that we police these markets.

Um So thank you, Mr. Chairman, it's clear that you and your staff are thinking deeply about these uh these issues. Uh would you be willing for your staff to give a deep dive briefing into the many jurisdictional and regulatory questions that committee members might have?

Chairman, absolutely, we'd be happy to provide that briefing and as you state these are very complex issues that we as subject matter experts are spending a lot of time on, we'll be happy to educate your staff and and others on the committee on.

Very good. Thank you so much and I will yield back the balance of my time and recognize the ranking member for five minutes.

Thank you, Mister Chairman, um and again thank you for being here Mister Secretary. It's my understanding that the agency is currently operating with approximately five percent of the five hundred and forty-three full-time employees, down from seven hundred and eight at the end of fiscal year twenty twenty four. That's a reduction of over twenty percent of the workforce. Your budget request to Congress only seeks to fund six hundred and fifty employees at a time when we're seeing continued growth of traditional futures markets the swaps markets and in emerging digital assets and prediction markets. Do you think it's reasonable to believe that the agency can be effective in twenty twenty six

Well thank you, Ranking Member, and and yes, I I do believe that we are running more efficiently and effectively than ever before, thanks to some of the right-sizing of the government that's occurred under this administration thanks to the President's leadership. And it's apt ab absolutely vital that we continue to monitor, surveil, and police and we are doing just that. We are utilizing new tools, some from AI to automation and and other surveillance systems that we're building out and we take this responsibility very seriously I assure you. Uh we have ranked up in terms of our staff. I I will say that the resumes speak for themselves. We're hiring very talented people from the private sector as well as talent from throughout the government, so we will continue to build up our staff. We have job postings on USA jobs today and and are actively

I'm gonna resist the temptation to argue with you on the efficiency in the Trump administration but um I'll stick with the CFTC here this morning. I'm very concerned about some of the activity going on with prediction markets under your jurisdiction and policing these new prediction markets for fraud, manipulation, and insider trading. The exchanges where the

The Commodity Exchange Act sets forth a a regulatory scheme where the exchanges are the first line of defense. self-regulatory organizations, which means that they have quasi-regulatory authority granted uh to them by the government. These exchanges monitor for activity in their markets, including insider trading, abuse of trading practices, fraud, and market manipulation. They're also the the first line in reviewing contracts that are listed. So these contracts are typically self-certified with the agency. The exchange is certifying to us that they're not readily susceptible to manipulation, among other things. the second line, we are always reviewing the activity of these exchanges on a regular basis and reviewing each contract self-certification we have the ability to reject those contracts we also have the ability of course to work together with the exchanges to police fraud insider trading and market manipulation and so we're in regular dialogue to learn about what's occurring in these markets we're surveilling them the exchanges are surveilling them and we're of course working with law enforcement where appropriate as well so it's a a comprehensive scheme where we have multiple

Mister Chairman, how many, you mentioned, you have the ability to reject these contracts. Do you know off the top of your head, under your leadership, how many of these contracts have been rejected?

Ranking member, we regularly reject contracts. I don't have the exact number in front of me, but what I will say is that under the prior administration there was a lack of

Thank you. As you all know, you are the only commissioner at the CFTC. A scenario that it is fair to say Congress never intended. I talked about this in my opening remarks. Um, can I get your commitment that you will Well, number one, can I get your commitment that the Trump administration, when it adds commissioners, will do so as Congress intended on a bipartisan basis, and also your commitment that you won't finalize any new regulations

Well, of course, the President makes decisions around nominations, and so I look forward to working with whoever the President chooses to nominate. But in the interim, we cannot, for the sake of the American people, slow down on our rulemaking. It's very important that we get investor protections, consumer protections, and safeguards for our markets. And and so I cannot unfortunately commit to not do my job, uh, uh, that I was appointed to do by the President.

Thank you. Just confer.

Generally, his time has expired, now recognize the gentlemen from Oklahoma, Chairman Emeritus of the House Agriculture Committee, one of them, uh, Mister Lucas, for five minutes.

Thank you, Mister Chairman, and thank you, uh, Chairman Selig. It's good to see you again. I wanna start off by thanking you for finalizing finalizing last year's proposal to expand cross-margining to customers. As Chairman of the Task Force on Treasury Market Resilience over on another committee, I've been calling for the CFTC and the SEC to finalize this proposal and well in advance of the clearing rules effective date, especially in coordination with the Basel re-proposals changes in netting. Uh, Chairman Seely, the treasury market is the most important market in the world, and the last

Congressman,

Mm.

I absolutely share your view that the tr treasury markets are critical, and we've got to make sure that we have efficiencies in our markets, and for two too long the SEC and CFTC regimes have not been compatible with one another, and so we've had broker-dealers on the SEC side and futures commission merchants on the CFTC side that have s different sets of customers, sometimes similar customers, but they've not been able to cross-margin and and net their um collateral across uh the regimes. And so we're working together with the SEC to make sure that that's no longer the case. Yesterday of course um we've put out some um exemptive relief for the CME and FIC to make sure that their customers are able to

The previous

I think it's absolutely essential that we continue to work together.

Absolutely. The previous Basel proposal would have significantly increased capital associated with banks clearing derivative products, disincentivizing the already limited capacity for ag-in users. We know clearing reduces systematic risk and that hedging in

One of the port important reforms that came out of Dodd-Frank was focusing more of our derivatives markets into clearing. Um and and I think this has been very v beneficial.

Mm. You've mentioned previously that you're considering agriculture and energy

Mm.

exceptions.

Well it's very important that we have well-functioning commodity derivatives markets for our participants and and part of that goes to as as we just mentioned central clearing it also goes to making sure that we have robust order books with deep liquidity and so we're continuing to surveil the markets making sure that uh these markets are liquid that they're deep that they've got investor protection. accessing these markets are able to get the best value for their um for their money, and also making sure that there's uh not risk of of these uh clearing houses and and exchanges uh damaging the the r the uh books of our uh everyday Americans who are using the markets. Chairman, Congress created the CFTC and the SCC with separate and distinct missions. How are you ensuring jurisdictional lines of authority are not being blurred between CFTC and the SCC in order to ensure that our market participants who are Congressman, I absolutely agree, and the CFTC and SEC serve very different functions. The SEC is a capital markets regulator, the CFTC is a risk management regulator, and we've been uh really focused on the agricultural markets for so long, whereas the SEC has been more focused on Wall Street, and so it's very important that we keep these two agencies distinct, but it's imp

Mr. Chairman, Congress created the CFTC to regulate our derivatives markets for ag commodity end users. I look forward to seeing you reorient the focus of the agency on serving our producers and I encourage you to work closely with this committee and Secretary Rollins and with that I yield back, Mr. Chairman.

Uh, gentlemen, Mr. Chairman.

Thank you, Chairman.

Mm.

Uh And welcome, uh, Chairman Selig. Good to have you here. But I would like to focus on how Congress can help the CFTC protect sensitive information. in our markets from hackers and data breaches. And I spoke about this issue in the Financial Services Committee on yesterday as it pertains to the uh SEC. Now the CFTC and the SEC have recently entered into a memorandum of understanding to better align regulations on emerging trading models. And I'm working on a bill to address that, uh, along with my colleague from uh and friend f- from Cobb County, which we serve in together. Um, so I wanna ask you, Mr. Selig. Could you clarify to m-

Thank you, Congressman. For too long, the SEC and CFTC have failed to work well together, and this has been to the disadvantage of the American people. Um, our agencies are not able to share information and coordinate at the staff level. That means that things fall through the cracks. That also means that sometimes we might act in very different ways, and and that's gonna lead to inconsistent rules and regulations for the American people. It also is important for our surveillance system. We've gotta make sure that we're comprehensively surveilling the markets, and so it's helpful to have an understanding of what's going on in the securities markets, while we're at the SEC and and uh at the CFTC and for the SEC also to have an understanding of what's happening in the commodities markets. So, under this memorandum of understanding, we've committed to work together Okay.

Okay, thank you. And I've recently worked with my colleague from North Carolina, Mister Rauser, on induce introducing. the CFTC Proprietary Information Act to safeguard sensitive information. So, my second question to you is this. Mister Seeley, can you tell us how the commission handles requests and shares sensitive information? Tell us how you do that.

Congressman,

Okay, and uh Well, thank you for that, and are there any other authorities Congress can pr provide? to you, to the CFTC. That can help you and the commission better protect American sensitive information. And as I men as I mentioned to you, I'm gonna be working on this issue. I look forward to working with you and uh and as I mentioned, I'm working on a bill with Mister, my friend, and a colleague, and so uh we're gonna be working with you.

Yeah.

This is a tremendous problem, and our nation is losing a lot of money because of these hackers. And you two have got to work together and s synthesize what we're doing. So I look forward to working with you on it. Thank you. And I yield back, Mr.

The gentleman yields back. Now recognized uh the dist the other distinguished gentleman from Georgia, the Vice Chair of the full Ag Committee, Mr. Austin Scott for five minutes.

Thank you. Uh Chairman Selleck uh decentralized exchanges like Hyperliquid are now listing perpetual contracts on crude oil. These products are functionally identical to what is traded on the Chicago Mercantile Exchange and the Intercontinental Exchange. But They do not have segregated funds, market surveillance, or US oversight. As a result, many market participants and hedgers are concerned about real-world economics of these platforms. For example, searching volumes uh in oil contracts are potentially impacting the price of a gallon of gas for US drivers and if my m understanding is correct as many as two hundred thousand orders per second occur on um hyperliquid and other decentralized exchanges. How should Congress ensure these platforms meet the same standards as our regulated exchanges and what is the risk if we do not?

Congressman, I appreciate you pointing out uh this distinction between our offshore and onshore markets. And of course, the markets here in the United States are subject to comprehensive CFTC regulation. We require these exchanges and clearinghouses to register with us and to abide by certain core principles that are set forth in our statute and we surveil these markets on a regular basis. We are very much aware of some of these products trading offshore in markets that are not comprehensively supervised by us, and we of course our our goal's always gonna be to onshore those markets and to to have the markets subject to our regulation here in the United States and uh accessible to our US persons here in the US but we are monitoring this and of course, uh, to the extent

Well I look forward to specific recommendations that you have that Congress can do, um to make sure that those markets have to meet the same standard. If the if the volume that I'm seeing is correct, uh it has the potential to be detrimental to uh the United States consumer. Um in your testimony you said a priority of yours is to modernize the agency, keep pace with innovation, uh the markets overseen by the agency continue to evolve rapidly, uh including some of the technology that I just uh discussed. As we've discussed innovations uh innovation is in the Commodity Futures Trading Commission's mandate. I introduced the CFTC Research and Development Modernization Act with Congresswoman McDonald-Ribbett to give the agency it necessary tools to stay ahead of the curve. This particular piece of legislation expands in future mandate to explore new technologies, which we're seeing more trading on, um encourages the agency to establish a research and development plan, provides new procurement authorities to facilitate that plan, and allows the CFTC to work more closely with technology companies to understand what those technologies are developing and how those products will fit into or may fit into the agency's framework and their rules and regulations. Do you think updating and formalizing the commission's research mandate and tools makes sense? And will this be helpful, and how will this help the agency if you do?

Congressman, I appreciate your leadership on this issue, and I I think it's absolutely essential that we future-proof the agency, that we modernize the agency for things to come, and that can include things like research and and using new technologies, understanding those technologies, and we've taken uh clear leadership on that since I've joined the a

Thank you. I'll look in forward to any specific suggestions that you have with any changes, uh, that you may need to the legislation to make it for more effective with that, Mister Chair. I yield the remainder of my time.

Uh, gentlemen yield?

Yes, sir.

Thank you. Uh, Mister Chairman, um, uh, I I appreciate your emphasis on, you know, emphasis on efficiency, you know, kinda going back to previous discussions. I I mean think that's important, especially, you know, um sounds like you're really trying to leverage uh AI and automation where appropriate in order to gain uh gain gator ef uh gain gain greater efficiency. Um I also know that we're putting a lot on your plate with digital assets and and uh

Okay.

we obviously going down this path with prediction markets I don't know how that's gonna wind up um so

Absolutely.

I appreciate it, and I yield back. Now recognize the uh um uh to the distinguished farmer from California, uh, Mister

Thank you very much, Mr. Chairman, Ranking Member, and um my colleagues for this hearing. I think it's important and I think we need to continue this dialogue. There's a lot to dig into. Uh let me make an observation, uh Chairman Seelig, and I thank you for being here. Uh as I observed and I look back at the last twenty-six years of the commission, and its make-up on the membership and the requirement under the law that Congress said that three members be of one party and uh and the other two vacant seats be of the of of uh the uh other party. Um uh I I am at a loss to understand and I I'm sure you follow the law and you have a level of integrity. Uh but no one has determined that you're Solomon like, uh nor King. And I think it's uh inappropriate to have one person as much as you'll try to be attentive to making these determinations when the law was very uh a bipartisan representation. And that's my observation. And I hope we w uh address that at some point. But I wanna talk about some other efforts that are uh new today. Um uh uh we have the so-called event contracts. It's not just some new harmless financial product in my view. Uh in too many cases it's gambling by just another name. Uh betting on sports, on politics, on some cases even on war, uh instability and human suffering, while companies uh try to hide behind the federal law and call it innovation. It's not innovation. It's a bet. This is serious problem I think we have in States like I represent in California, where voters have already rejected rejected expanded on-line sports betting. It's serious problem for tribal governments, and we have a hundred and six of them in California, whose gaming rights and negotiated tribal state compacts, and there's a serious problem for credibility of your agency, your agency, Commodity and Future Tradings Commission, if an agency starts looking less like a market regulator and more like a body that's giving permission for these plat for these platforms and what they cover. I wanna say this plainly, when I was here when Dodd-Frank was passed, Congress did not put public interest guardrails in involving gaming or death or assassination so that they could be later repackaged as a new line of business on a federally regulated exchange. That's my view. And um so w I wanna know where you think this is going, uh Chairman Seelig. Uh let me shift uh to what this means for states like California. Uh tribal gaming does not exist in a vacuum, it operates under long negotiated tribal compacts, tied to

Well Congressman, we are taking our authority very seriously over prediction markets. As I laid out, the Commodity Exchange Act has a very broad definition of the term commodity, as well as a

Okay, on that point then tell me what the commission is not undercutting undercutting the tribes while these markets continue to exponentially grow because that's

Congressman, uh as I was saying, we take this responsibility very seriously to regulate these markets, and we've come out with an advance notice of proposed rule making that lists out virtually every question imaginable on the subject matter.

Well, I'd like you at a separate time to provide this committee how I I'm not doubting that you're taking it seriously but Congress intended sports wagering to be repackaged I don't believe Congress intended sports uh wagering to be repackaged as a financial project prog product uh to dodge rules that apply to everyone else, including our tribes. Um and uh for colleagues who are concerned about this, I'm working on legislation, I'd like to uh certainly encourage your participation if you're interested. But another aspect, I I find it deeply troubling that event contracts tie not just sports and politics, but to war. Reuters reported that six accounts made a combined one point two million profit from polymarket bets that were placed in hours immediately before the

Congressman, our statute has a very broad definition of the term Our statute has a very broad definition of the term commodity, commodity and a very broad definition of the term swap. and a very broad definition of the term swap. We have put out, We have

Well, I I don't find that a satisfactory answer. My time's expired, but let me just close on this note, Mister Chairman. Uh, I I'll tell you, I don't believe this is market innovation. Uh, that is profiting from tragedy. And I think we need to get more invested and detailed with where this is all going. Thank you.

Uh, gentlemen, his time has expired. Now I recognize the gentleman from North Carolina, Mister Rauscher.

Uh thank you Mister Chairman. Uh Chair Chairman Selig, uh great to uh have you here this morning, I'm over here. Uh great to have you here this morning and appreciate uh your testimony very much. I wanna touch on uh what my colleague um uh Mister Scott uh from Georgia, uh former Chairman of the committee uh mentioned as it related to uh uh protecting all uh sensitive data. Um you know the bill he and I were working on applies the same section eight, disclosure protection.

Congressman, Congressman, I I appreciate your leadership on this legislation and I share uh your view that it's I I appreciate your leadership on this legislation and I share uh your view that it's really important to be harmonized. really important to be harmonized and to have the right to have the right to have

And we appreciate that very much. Uh, moving on, uh your testimony's highlights on uh agriculture markets, or your testimony highlights uh uh agriculture markets and how CFTC can improve. Uh, you s

Absolutely. I think this is a really important issue to our agricultural community. I've met with many farmers, ranchers and producers who feel that they don't have access to the transparent information that they need. We of course are producing these reports and and generating reports on a daily basis but we only publish them

Very good. One other issue that's uh big in farm country uh particularly right now, uh the supply chain impacts in the Middle East have cut global fertilizer supplies by a third and prices have uh skyrocketed as as a result. According to a report released by the American Farm Bureau uh this

Mm.

It says almost eighty percent of farmers in southern United States uh in the southern part of the United States say they won't be able to afford all their needed supplies this year input cost obviously are are high all across the board. Uh and only nineteen percent of southern farmers pre-booked fertilizer purchases in advance of the plan planting season. So the question is this uh you know as you look at the global markets and how they operate with foreign traders possibly buying up, are

Well as I said in my opening statement, we have a zero tolerance policy when it comes to manipulation fraud or other abusive trading in our markets, and we will use the full force of the law against bad actors. We are also comprehensively surveilling these markets, and that's part of the reason we w entered into this memorandum of understanding with the SEC.

Thank you. Um,

Mm.

we've seen shifts towards twenty-four seven trading models and some participants particularly in agriculture are concerned about this approach expanding to all contract uh types uh has this been a topic that's come up in relation to the work that's been done by the

We're meeting with agricultural stakeholders on a daily basis, and getting input. We are also, as uh you mentioned, uh we have an agricultural advisory committee which I am the sponsor of, and uh have a a senior agricultural advisor that is managing the committee. So we're getting a lot of input from that. We hope to soon come out with some uh more information about the topics and subject matter

Very good. Uh, thank you, Mister Chairman. My time's expired.

Chairman,

Uh thank you and um I wanna thank you Mister Chairman for being here, and while I appreciate that you think this administration is done right by American farmers let me tell you that uh our farmers are struggling like never before, in a large part due to policies uh that this administration has championed. Uh but I I wanna talk about the predictions markets. Um as you know um I and others, including Ranking Member Craig, sent you a letter expressing our serious concerns about the possibility of insider trading. And I'll get to that in a in a moment, but I just wanna ask a couple of basic questions here. Uh, Mister Chairman, would you say that the two biggest prediction markets, uh, Kelshi and Polymarket are competi uh, competing with one another? I mean, they're competitors, right?

I believe all market participants are in competition.

Alright. So, that it's I take that as a yes. And as competitors in the same field, it would stand to reason then that they're trying to gain an advantage over one another. That's what

That's what

Yeah.

competition is, yes.

Yeah. So, Mister Chairman, are you aware that President Trump's son, Donald Trump Junior, has been hired as an advisor for both CalShe and Polymarket, two competing companies?

Congressman, I'm aware of this.

Mm. Uh, uh, and and would you say that it's accurate then that the Trump family has a financial

Congressman, uh I I believe this hypothetical uh uh that you're trying to engage in is is a political exercise.

Well, yeah, uh I I don't know how this is hypothetical, the president's son is, you know, um you know, uh involved with both of these companies, I mean he makes a lot of money for it, but uh of course they have a financial interest um in in in all of this. I mean the president's son is on the board of both multi-billion dollar prediction market companies. So it seems to me like the only

Congressman, we treat all market participants alike. Congressman, we treat all market participants alike. We do not pick winners and looters or or engage in favoritism or or bring We do not pick winners and looters or or engage in favoritism or bring

No,

Mm.

be I I'm worried because it smells like corruption, I'm I'm I'll be honest with you. Miss. Back to something you said about prediction markets and going after insider trading. You said in your testimony just now that anyone who engages in fraud, manipulation, or insider trading in any of our markets will face the full for force of the law. And just before seven AM on Monday, March twenty third, someone placed roughly five hundred million dollars in oil and equities future trades, betting that oil prices would plummet and the market would rally. And at seven O four AM, President Donald Trump posted um uh on True Social that the US had begun ceasefire talks. Now, whoever placed that bet kn knew what the president was about to post, um and made a lot of money off of that, made a lot of money off of that. Are you uh, you know, Mrs. Salisbury, you and I both know that the odds of that bet is like a billion to one. And I have one example after another of similar bets. There was no public information about ceasefire talks. These are decisions that are made um in the White House at the highest levels, decisions that are that very very very few people know about until the President posts them. So yes or no, Mister Saley, do you do you think the President's top staff would have that knowledge about a ceasefire?

Congressman, as I said in my opening statement, we have a zero tolerance policy when it comes to fraud, abusive trading practices and manipulation, and anyone who engages in that behavior will face the full force of the law.

Do you do you think the p do you think the President's family would have knowledge of uh of that uh like what about Donald Trump Junior, do you think he would have known that maybe a uh an announcement of a cease-fire was coming?

Congressman, I'm not gonna play speculation games with you, but I will tell you that we have a zero tolerance policy when it comes to fraud manipulation, Right. Right. insider trading. We will bring actions against those who engage in that behavior.

So, so yes or no, are are you aware of public reporting that the net worth of the Trump family, meaning President Trump and his immediate fa- family members, has gone up by one point four billion dollars since he took office a little over a year ago? Uh, because it has. Uh, and I believe that this president is using public power for private profit. And I think he and his family are lining their pockets with insider information. And I think Donald Trump Junior is trading his access for money. And I think it's the definition of corruption. And I think that your actions to deregulate this market are helping them do it. And I think it is wrong. I think it is wrong. And I think it's something that this committee needs to pay much more attention to. With that I I yield back like that.

The gentleman's time has expired. Now recognize uh a gentleman from Nebraska.

Thank you, Mister Chairman,

Won't be late.

and also thank you,

Five minutes. Yeah.

Mister Chairman, for being here.

Great, great.

I would like to follow up on some of the questions that Mister McGovern a asked. There h there are a number of stories circulating, describing patterns of insider trading. that the that the authors claim to be obvious uh trading. So my first question is can publicly available trading data disclose individual traders their individual positions or the intentions behind invi individual trades?

Well Congressman, we have a number of different um venues for transparency in our markets. Of course the exchanges themselves have order books that we are monitoring as the CFTC as a regulator of these markets. We also have swap data reporting. So a lot of the swaps markets that are over the counter in the wake of the financial

Mm-hmm.

crisis we had Dodd-Frank which has brought transparency to those markets. So of course the public has a line of sight into what's happening over the counter, as well as on the exchanges, and the CFTC is the the real uh line of defense in monitoring all of that.

'Kay, a follow-up. S second, does the commission, either directly or with applicable self-regulatory organizations, examine reports of ins of insider trading in the markets regulated by the commission?

As as it self-regulatory organizations, the exchanges have the ability to surveil and and police and monitor their markets. They of course have rule books that expressly prohibit things like insider trading, market manipulation, abusive trading practices. And uh some of the exchanges have brought recently actually actions both in the prediction space as as well as in other contexts in in our more traditional markets. And so that's something exchanges are doing on a regular basis. We're examining and overseeing those programs as the regulator of these SROs. and will continue to do so.

Uh third, has the commission examined the facts behind some of the recent high profile accusations of insider trading in oil and S and P five hundred features?

As I said in my opening statement, we have a zero pol tolerance policy when it comes to fraud, insider trading, and manipulation in our markets, and we're actively policing and surveilling these markets. I can't speak to any uh particular investigation, the existence of an investigation or not, uh because of course that would hinder the investigation itself.

'Kay, I'll also have a follow-up with uh Mister Costa's uh question. Uh, I've seen some of the uncomfortable stories related to prediction markets in recent months, including the markets on Maduros, Oster, and the war in Iran. Markets settled just by words spoken on earnings calls and a story about a journalist being threatened over his reporting. My question to you is, do you need more authorities or how can we assist in this area?

We have a wealth of authority under the Commodity Exchange Act, as I mentioned. Previously the definition of commodity is very broad, the definition of swap's very broad. Our extra territorial authority to the extent things are happening offshore, is fairly broad. There are areas where it could be expanded. Under Dodd-Frank we have a much greater extra territorial authority when it comes to the swaps markets but uh the futures contracts markets, uh less so. And so that's certainly something we'd be uh willing to to consider and work with your office on expanding.

If we could take some of your counsel advice on how we can provide the better and more defined authorities for you, we'd be glad to support and work with you. Uh with that, Mister Chairman, I yield.

Gentleman yields back. Now please recognize this distinguished lady, Doctor Adams from North Carolina for my part.

Thank you Mister Chairman and thank you Mister Selig for uh being here. Um I I wanna follow up uh on um the ranking members uh question and also Mister Costa made reference to this. Um in terms of the uh the e the the regul new regulations and you being the only sitting uh Commissioner, did you say that you would move ahead, move forward with um making new major new regulations? Did i did I understand you say that?

Congresswoman, co women, I b I believe I need to do that as Chairman of the agency, it's absolutely essential that the American people have the investor protections that they deserve and so we will continue to evaluate the need for new rules and, uh, move forward with those rules.

So so y as one person and other commissioners are not there, you think you c okay, okay. Let me let me move on. Um your testimony uh says that that your staff has been right sized, uh come with some rules so that even small producers farmers can properly man uh manage risk but we haven't seen any proposed rule changes announced uh by the commission, uh just the ANPR on on prediction market so can you explain what

Congresswoman, we're working on rules that will help protect our farmers, ranchers and producers. One of the biggest issues that we're addressing has been the the lack of the ability to access the markets. So some of the Futures Commission merchants, which are the brokers, that these farmers, ranchers and producers are using to uh get to the exchanges, they've been really heavily regulated. We've seen the mass over-regulation of the real world economy through Dodd-Frank regulations over the years so we're taking a hard look at those and we do look forward to coming uh out with some new proposals that we believe will help roll that back we are also looking at the swap dealer de minimis threshold as I mentioned in my opening statement there are many of these dealers out there who are reticent to transact with the smallest producers whether it's in energy agriculture or critical minerals and so we're hoping to take a look at

Okay. Thank you. Let me let me move on. So the Financial um Times reported that US uh broker Robinhood has excluded some prediction markets and some contracts from their customers over concerns uh they encourage manipulation and insight trading. They're particularly worried about so-called mention contracts where wages are made on words that will be used at certain speeches, These are contracts uh that can be found on US regi registered uh exchanges. So if Robinhood recognizes these contracts as susceptible to manipulation and trading, why doesn't CFTC?

Congresswoman, we've come out with an advance notice of proposed rule making on this subject, so I don't wanna prejudge any of those issues, but we've laid out and and I believe we've submitted it for the record, a list of questions related to this subject as well as many

Okay, so uh do you believe that these mentioned contracts, for example like what former Congressman George Santos uh said on News Mac, on a News Mac interview, do you believe that they are not susceptible to manipulation?

Well, Congresswoman, I'm not going to prejudge these questions as I mentioned. Of course the exchanges are the first line in determining whether a

So so let me let me ask uh about this enforcement report.

Mm-hmm.

Uh typically the CFTC uh publishes this enforcement report during the quarter uh at the end of the fiscal year October one through December thirty. It's it's six months uh and a half um past that since uh fiscal year twenty five has ended and the CFTC still has not published uh its twenty twenty five enforcement report, which would primarily cover the period of your predecessor. So is it uh your decision to withhold publication of this report? If so, uh why, and if not, uh whose decision uh is it?

Congresswoman, I've been in the seat for just over a hundred days now.

Thank you, Mr. Chairman. I yield back.

General, I yield back now recognize uh the favorite son of South Dakota, Mister Johnson, for five minutes.

Chairman Selig, thanks for being here. I was glad uh Chairman Thompson hit a little bit on clarity, uh which as you know

Well Congressman, I I applaud your leadership. on digital asset issues in this committee for uh working to advance bipartisan crypto market structure legislation I believe that the legislation is really critical to allow for exchanges brokers and custodians to register with the CFTC I think this is an important endeavor we've seen for too long this patchwork of state licensing regimes whether it's virtual currency licensing or money transmitter licensing and I believe that the work of this committee as well as the work ongoing in the the senate act.

So, obviously if the Clarity Act gets passed in law, which it should, uh it's a strong bipartisan work product. I mean your agency is gonna be, you know, given some additional uh tasks, uh particularly on the spot market side. Uh do you have comfort, sir, that the the legislative

Congressman, I do believe that everything I've seen to date, of course we don't have the the final version on the Senate side, but everything that I've seen so far has been excellent and really provides the agency with the authority it needs to comprehensively regulate these markets to have registration of new market participants and make sure that we're uh really a future forward regulator for this new asset class.

Course it it Too often it's the case that Congress doesn't act until there's some urgency. Uh, the b- I mean, talk to the committee a little bit, a little bit. Is there any particular urgency in the marketplace? Uh, I mean, are there are there particular reasons why Congress should act to pass the Clarity Act or some other, you know, market, uh, you know, market regulating a bill in the in the short term? I mean, i- or or should we just shrug our shoulders and say we could get this done in five or ten years?

Well we saw with the implosion of FTX that the CFTC regulated FTX platform protected customer funds whereas these off-shore platforms platforms uh subject to different regulatory treatment uh really did not have the safeguards to protect American customers and so I think it's absolutely critical we everyday we delay as uh as putting American investors and consumers at risk and I am concerned that if we don't get this done now we won't have adequate time to to get the rules in place, and so that

Yeah, Mr. Chairman, I think that's exceptionally well said. I mean, if we care about consumer protection, and we need to, if we care about innovation, and we need to, uh, if we care about a fully functioning, uh, marketplace, and we need to, uh, passing the Clarity Act, uh, is really, really important. Lots going on, in your world. I I just wanna touch base and and see how the conversations are going with your agricultural advisory committee as they look at all of the things going on at the commission that are m- maybe not related to the ag portfolio of your authority. Does the committee feel good about uh where where your work's at on the agricultural side?

Absolutely. So we have revitalized the agricultural advisory committee. It's got a great team. Um we've just announced the whole roster and we're looking forward to having the meeting uh open meeting very soon uh with the full uh slate and so the critical issues i've discussed some of them today but of course the cot reporting twenty four seven trading all of that will feature prominently i think in these discussions and i'm looking forward to uh continue discussions with the agricultural community and other venues as well we've announced our ag con uh that will be held later this year and so it's not just limited to the ag advisory committee i encourage anyone that's interested

Thanks much. With that, uh Chairman Thompson, I would yield back.

Chairman yields back, now recognizing General Lee from Oregon, Miss Salinas for five minutes.

Thank you, Chair Thompson, for holding today's hearing and Ranking Member Craig, and thank you to Chairman Selleck for being with us today. In his speech on March thirty-first that you enclosed with your two page um testimony, Director of Enforcement David Miller outlined the Division of Enforcement's five enforcement priorities and stated that CFTC will hire additional staff

Congressman,

As I said in my opening statement, we take enforcement absolutely critically seriously. This is a top priority of mine as Chairman. I cannot have uh threats to our markets, such as insider trading, manipulation, and fraud undermining uh the real important policy work that we're doing here, the real um important investor protections that we're putting in place. So David Miller has been uh staffing up within the Division of Enforcement, and I I the number that you cite, the three persons, I I believe,

Thank you. How many investigations re related to prediction

Mm.

markets are

Congressman, we have numerous investigations ongoing, I can't speak to the specific number and and the specifics of those investigations as that is something that's non-public.

Why not?

It it would hinder the investigations themselves and of course

In the aggregate, how many investigations are ongoing, you can't give us that number?

Congressman, we we receive hundreds of tips uh that prompt investigations, so there's many many uh whether it's in the hundreds or thousands investigations ongoing I can't speak to the specific number. but of course we're always receiving tips and always responding, and and making sure that we're uh protecting our markets.

Okay, those hundreds to thousands of investigations, how long do the investigations typically take?

Congresswoman, the investigations can take varying lengths, uh it really depends on the nature of the investigation. We are not going to rush these investigations and then oftentimes they require coordination with law enforcement and other agencies, uh but investigations take varying lengths, sometimes it can take up to a year or multiple years before we

Okay, thank you. Um, has the commission considered whether additional safeguards such as geo-fencing might be appropriate in certain contexts including with respect to activity occurring on tribal lands and if so what factors would inform that kind of rule making?

Congressman, uh we we've come out with a an advanced notice of proposed rule making when it comes to prediction markets, uh so we are soliciting comments as to uh any changes to our rules with respect to these products. We of course are

Thank you. Um, I would like to work with you on that. Um, can you explain how the lack of geo-fencing might interact with the Indian Gaming Regulatory Act?

Congresswoman, uh, this again is a matter that I don't wanna prejudge. It is something that can be um addressed in our rulemaking so we've asked for public comment on these questions.

Thank you. Um one final question. I am co-chair of the Mental Health Caucus with um one of my colleagues, um Mister Bacon as well. There's growing attention around behavioral um health risks in both financial trading and gambling. How does the commission think about mitigating risks of excessive or compulsive participation in prediction markets and is this something that you track?

Well, Congresswoman, this is something that is deeply concerning to the extent that there's addiction, um or other harms coming from

Thank you again for being here.

General A yields back, now recognized a gentleman from Kansas, Mister Mann, for five minutes.

Great. Thank you, Mister Chairman, and thank you for being here um to testify. I represent the big first district of Kansas, which is sixty primarily rural counties in western and central Kansas. The CFTC plays a critical role in our economy, ensuring that our markets for ag producers function as they should. For farmers, ranchers and ag producers in my district, these markets are essential. risk management tools to allow them to hedge a ton of uncertainty in agriculture and secure prices, which is always the case. Um appreciate CFT's oversight on these very important risk management tools. It was mentioned before, but to reiterate, and as you know well aware, the agency's gone more than fifteen years without full reauthorization, even as the markets that you regulate and the challenges facing agriculture have grown more and more complex by the day much less the last fifteen years. So I think we all agree it's way past time that we uh re reauthorize um CFTC and make sure that we have transparent, fair and well-functioning markets. Uh ju just a few questions for you uh Chairman Seeligan again. Thank you for being here today. In your written testimony you mentioned that your agency is rebuilding the Agriculture Advisory Committee. I I know I think just last Friday you um you know released the members of that committee. And I know you also have mentioned that you're uh reintroducing AgCon in conjunction with

Thank you, Congressman. And I enjoyed the opportunity to hear you speak at the Commodity Markets Council conference uh several months ago.

Mm-hmm.

I the Agriculture Advisory Committee and our AgCon efforts are really critical. We've got to make sure that our farmers, ranchers and producers have a seat at the table. And there's so many ish issues that they're interested in

And and what have you been hearing from the

folks. Well they're both excited about the new um technologies and changes in our markets, but they do have some concern about things like twenty-four seven. Um the reporting's an important issue, so the the reporting of the uh trading on call reports, they want to make sure that that is uh transparent. They've been concerned that some participants have accessed this information from proprietary uh tools that they don't get,

Uh I'm glad that you've mentioned the twenty four seven model.

Mm-hmm.

I had stopped by over the district the last couple weeks, met with a um cattle feeder in Garden City, Kansas, which is in Southwest Kansas. You know, these are very sophisticated ag producers.

Well twenty four seven is not one size fits all. So we have to look at each product,

Mm.

each market, and consider whether it makes sense for for that product market. And as I mentioned, many of the farmers, ranchers and producers are concerned that they're gonna have to trade on a twenty four seven basis monitor the markets all all all night um and that also means, uh, twenty four seven risk management. So these are all considerations and concerns that we're taking in. We've, uh, actually come out, uh, I believe under chairman Pham, uh, previously, uh, in soliciting input on these issues and we'll consider the cons uh all of those comments. Uh, but it but it's definitely something that

I I really appreciate you saying that. I think it's important to acknowledge that if we get this wrong in twenty four seven, you know, has the impact to or the potential to really impact our food supply, 'cause you could have some very sophisticated large ag producer, small ag producer for that matter, that go out of business because they're on the wrong side of a market move, because it happens at three thirty in the morning, because there's something going on on the other side of the world, right? So I think we have to uh understand it and acknowledge complexities of these markets and the importance of getting it right for ag producers so thank you for being here uh Mr. Chairman I'll yield back the uh six five seconds that I have.

General The gentleman yields back. Our recognized gentleman from North Carolina, Mister Davis, for five minutes.

Um thank you so much Mister Chair and to the ranking member for having today's meeting and all the work of the committee um regarding the CFTC. And to the chair thank you so much for being here today. I've taken tremendous interest um in the CFT And I wanna jump in here. The recent um SCC CFTC memorandum of understanding uh which represents a significant step towards reducing fragmentation and improving coordination among our financial regulary regular uh regulators from your perspective, Mister Chair, what are the most meaningful ways disagreement will improve regulatory clarity and consistency for market participants particularly in areas like digital assets where jurisdiction has historically been less clear.

Thank you for that question, Congressman. I this is a really important issue. Uh, if you look at digital assets a as you uh suggest, blockchain networks span all sorts of products. We've seen digital securities, digital commodities, collectibles, and all sorts of things put on a blockchain. And if we have different rules and requirements on the security side, from the commodity side, that can create market uh and that can also result in essentially having to use different blockchains and different types of technologies on each side we want things built in a way that works for both securities and commodities and of course there are differences in the way we regulate and our requirements so having the open line of communication having the ability to share ideas and work together to make sure we get it right on both sides in a way that really fits comprehensively and works well together is important to uh the American people. And so Chairman Atkins and I are

Um uh thank you. In your remarks at the DC Blockchain Summit, um you spoke about a shift towards trust and decentralization, where market confidence can increasingly c um come from transparent systems and verifiable code. Um as the CFTC evaluates digital

Well for too long our software developers, our builders, our innovators have been living in this world of uncertainty where they're trying to build software systems that oftentimes achieve the goals of our regulations, but they might do it in a way that's slightly different from the way our rules and regulations are set up, the the way that they require things to run. And so we need to create a future-proof flexible regulatory scheme that allows for these software systems to function. Um oftentimes automation really works better than regulation, because you know that the code is designed to achieve the aim and it functions as designed as opposed to regulation where we have to look over each participant, make sure that they're following the rules. So we don't wanna discourage software systems that are autonomous and function uh on-chain in in a way that achieves our regulatory aims. Uh we need to accommodate that and and allow for it. So we're working closely, uh as I mentioned, with the SEC and also with the market participants to understand what they're building and and make sure we have the space here in the United States for them to do it.

Mm-hmm. Well I wanna make clear, I don't come up here to focus on throwing a text at anybody, the other side. But I do believe that this is a very um for me I think an important conversation uh that we should be able to have in a meaningful way. Um you're currently the only Commissioner at the CFTC. Um leaving uh four Commissioner's seats vacant a- and I realize you know the President has a role in this and again it is not aimed here at an attack. But my question just perspective and background is what do you see as the impact um the lack of having other commissioners um that's on board you know working um during this critical time um because right now the role of the CFTC is vastly changing.

What I believe is critically important is that we get a wide range of

You know,

Mm. Mm.

my s time expired, uh I've now recognized

Uh thank you Chairman and uh thank you Chairman Seely for being here today. Uh last November Representative McLean, Delaney and I introduced the CFTC charitable organization exemption act. Uh many churches provide retirement and medical benefits to their employees through something called a church plan. And while a small church uh may not be able to provide robust benefits for its staff, church plans allow multiple churches to pool their resources and improve how they can serve their employees. Unfortunately,

Congressman,

Mm.

I appreciate your leadership on this issue, and I I do believe that some of our rules and regulations really are ill-fit for market participants.

Okay. Uh would you uh commit to partnering with me an as Congress works for a legislative solution for church plans?

Congressman, I'm very happy to work with your office on this legislation.

Thank you. Uh, now I wanna pick your brain about another uh, another one of CFTC's legal priorities. As you know in the twenty nineteen, a CFTC re-authorization bill, which passed out of this committee with broad bipartisan support, included a provision related to privilege retention. Uh, could you explain what privilege r privilege retention is and why it's an an important protection for the CFTC?

Well Congressman, as we're working with various matters, we engage in certain communications and oftentimes those communications

Okay, thank you. How would uh benefits of privilege re privilege retention protection translate to the CFTC uh registrants or individual consumers?

Well, Congressman, I do believe it's very important that we protect

Gentlemen, yield back. Gentlemen, yield back. Um, votes will be called momentarily, but my intention is to Um, votes will be called. Momentarily, but my intention is to

Thank you, Chairman. Um and thank you for being here, Chairman Selig. Um I also wanna thank my ranking member too,

Thank you.

I don't wanna miss that opportunity. Um but thank you, Chairman Selig, for being here. I do appreciate that. Um right now the Commodity Futures Trading Commission is really in the spotlight, because of the role it plays in new and emerging markets, especially prediction markets. Um at their core prediction markets can look pretty harmless. People are trading uh people are trading on questions uh such as you know, what song will be number one, who the next James Bond will be, um but that's not really where it stops is on these kind of more lighter questions obviously. These markets are also being used to trade on real world events, government decisions, geopolitical conflicts, and even military action. And that is where prediction markets start to raise some really serious concerns for me. Earlier this year, an article crossed my desk that um that made this risk very real, and I point this out, hours before the United States carried out airstrikes on Iran, a group of newly created accounts on Polymarket placed significant bets that those strikes would happen. Six wallets funded within twenty-four hours of these strikes, bet yes that they would happen and when the strikes would happen, and then they ended up, these six wallets, those folks that um had them, walked away with about one point two million dollars in profit. That looks like someone that perhaps might have knew some inside information in my opinion, or at the very least was trading like they did. And it is not just a one-off event, we are seeing repeated patterns of well-timed, highly profitable bets, sensitive global events. That should concern every single one of us, I think, in Congress. I think the question is pretty simple, how did they know that information? And that's why I introduced a bipartisan bill called the Predict Act, to make sure senior government officials, including members of Congress, senior staff, and executive and judiciary branch officials, cannot participate in prediction markets using non-public information that they gain through the jobs that they have. This bill is straightforward, if you are entrusted with sensitive information, you cannot turn around and profit off of it. Because there is a clear difference between making an educated guess on what can happen and insider trading. Public servants should not be profiting off of privileged information that is entrusted to them by the American people. If we do not draw a clear line here, we are leaving the door wide open to corruption. So Chairman Selig, I wanna thank you again for being here to talk with us,

Congressman, Congressman, uh woman, uh woman, thank you very much for your leadership on this issue. thank you very much for your leadership on this issue. I think it's vitally important that we protect our Uh from insider trading, fraud, manipulation, abuse, and as I said in my opening statement, we have a zero tolerance policy when it comes to any of this activity in our markets. I believe that it's in our statute uh currently to to of course police these things, but uh we can always uh use additional authorities and so we'd be happy to work with your office on uh how to build that out further. Um in our statute, the insider trading authority is based on our anti-fraud and anti-manipulation authority.

That would be great.

Mm-hmm.

I look forward to that. Um um the CFTC CFTC is responsible for overseeing the markets that our farmers producers and cooperatives rely on every single day to manage real risk as you know. At the same time the commission's responsibilities are rapidly expanding into digital assets into prediction markets and into increasing complex and fast-moving financial profits I products I I know this has been covered by some of my other colleagues but I share their concern about the lack of staffing at the CFTC and I wanna specifically highlight you know you're an independent agency just like the Consumer Product Safety Commission is an independent agency there's a lawsuit that's a a a a legal action

Well as I mentioned,

Mm.

the way that we're addressing this is by making sure that we go through the Administrative Procedure Act while making

Gentlemen, his time has expired. Now recognize the gentleman from North Carolina, Mister Harris, for five minutes.

Thank you, Mister Chairman, and thank you, Chairman Selig, for being with us today. Mister Chairman, I was concerned to learn that the only approved metals depositories used for deliveries on gold and silver futures contracts are heavily concentrated the single geographic region around New York City. And this level of geographic concentration is troubling to me from a point of national security, market efficiency, and operational resiliency standpoint, which is why I've chose to be an original cosponsor of the Silver Act that seeks to correct this issue. After all, we've seen firsthand whether through terrorist attacks like Nine Eleven, extreme weather events like Hurricane Sandy, the New York region is not immune to And so concentrating critical financial infrastructure in a single region like New York does tend to create uh potential risk and vulnerabilities that we just wouldn't accept in other sectors, especially one that is so crucial to our financial system. So with that uh and our national security, this is why I believe geographic diversity is an important component of operational resilience and risk management. Mister Chairman, let me ask you, while it made sense a hundred years ago for the

Well Congressman, as uh a regulator of our commodity derivatives markets, it's absolutely critical that we have deliverable supply available, as it's uh possible to take our futures contracts to delivery. And uh to the extent there's concentration risk,

Super. So, are are you willing to study whether the current concentration of precious metals depositories in a single geographic area does pose a systemic risk to market stability and our national security?

Well Congressman, we we'd certainly work together with your office to to better understand the risks posed by these um

Super. Well, these markets really were designed to help participants manage and mitigate risk, so it stands to reason that we should also ensure the market structure itself is resilient and capable of mitigating its own risk. Real quickly, and uh before we break for for votes, um my colleague, Mister Messmer, brought up the issue, and I've been a pastor for thirty-seven years, so I'm well aware of the fact that churches often operate with a limited administrative and financial resources. He mentioned the problem and you addressed the issue. I wanna go a little bit further. In twenty fourteen the CFTC issued a no action letter offering relief for church pension plans and in twenty seventeen a no action letter offering relief for university endowments endowments. These policies have remained in place since they were issued across multiple administrations. However, we know these letters can be revoked at any time. As Chairman, are you committed to continuing the precedent set by

Congressman, I'm glad you raised this. I think it's critical that we actually take a lot of these new action letters and codify them and and rule so that they have longevity cuz there is always

Great.

this risk that a future chairman or future commission will come along and pull those letters so we'll certainly continue to uh keep that in place but we'd like to uh work on trying to

Agree with you a hundred percent. We didn't wanna codify it, but just wanted to know that you were on the on the same page here and moving forward. And with that, Mr. Chairman, I yield back.

I appreciate the gentleman yielding back. Uh, I've been informed there are votes raised in McCall, but we're gonna recognize Mr. Vasquez and I when he's done, we will recess the committee and I I think anyone who stays will have uh adequate time to get to the floor for the vote. So The gentleman from Mexico is recognized.

Thank you, Mister Chairman, and welcome, Chairman Selig. Um, Chairman, behind me are two separate betting lines for a baseball game that took place earlier this week. So I'd like to ask you, can you identify which betting line is from a regulated major sportsbook, and which one is from an event contract from a prediction market?

Congressman, I I'm not an expert on identifying betting lines, so I I'm not certain, why don't you um please enlighten me.

Well, it's clear to me that you can't. And that's the problem because the average consumer also can't tell. Um, here you see that the results from the prediction market and the state regulated gaming entity, and the lines that are put on these sports bets aren't much of a difference yet they are regulated completely differently. And although the odds are functionally the same, the outcome for the end user is the same. Consumers couldn't care less if they're using an official sportsbook, or engaging with the prediction market. The purpose of engaging in the activity for monetary So here's the problem, Mr. Chairman. Tribes in my district and across the nation have gone through decades-long negotiations, agreements, and settlements with states and the federal government to have the ability to engage in sports betting. States themselves have as well. They've built out legal gaming systems with compacts, licensing, integrity rules, age verification, and consumer protections. So when a federal agency like the CFTC allows prediction markets to bypass these long-standing legal requirements, but under a different label and uses loopholes to evade regulation and consumer protection standards it it undermines tribal sovereignty and state protection. What this means in practical terms is that tribal communities, like the Pueblo of Laguna in my district which I just visited, are losing out on vital revenue to pay for their child care, education, infrastructure, and the overall well-being of their community. Not fair, right? Now I understand the CFTC's role is to oversee derivative markets traditionally that has meant helping businesses hedge real economic risk. Airlines hedge fuel costs, farmers hedge crop prices, that is very different from putting money on the outcome of a baseball game. On a prediction market consumers can trade on whether, as an example, Astro's second baseman Jose Altuve hits a home run in tonight's game against the Rockies. Does a contract on a single player's performance on a single statistic hedge any real economic risk?

Congressman, there are many risks that could be hedged through various contracts in our markets. The bottom line is that these markets need to be well-functioning and and comprehensively regulated by the CFTC. Our statute mandates it and we'll continue to do it.

Well, Commissioner, with all due respect, uh, I don't think this is hedging. I think this is a bet, as is clearly outlined uh, in in the way that these transactions are taking place. And so let me make this clear. Uh, the CFTC was not created or intended to regulate sports gambling. States, tribes have systems for licensing, integrity monitoring, and responsible gaming, such as age verification and addiction support and enforcement. If this product looks like sports betting, the public should expect sports betting type of protections and regulations. So at the end of the day, this comes down to a simple question, are we regulating real economic risk, or are we allowing prediction markets to steal billions of dollars in an unregulated free-for-all with no consumer protection as Congress, and the C. The CFTC should focus on ensuring that the integrity of the derivatives and commodities markets ensuring that farmers and businesses receive fair prices and protections and preventing our country from facing another financial crisis that should be the focus I believe the CFTC does not have the know-how and it doesn't need to be focused on sports betting because our tribes and our states can't do that now in your

Mm-hmm.

earlier comments in your introduction you mentioned what you were focused on was modernization rapid speed and response to innovation and that is your focus. Now what I did see with rapid speed was the withdrawal of the two thou- two thousand twenty four proposed rule on political and sports contracts. What I would also similarly like to see in terms of that rapid speed and response to innovation and modernization is actual regulation so that we can allow our tribal communities our tribal nations with their own negotiated contracts not to lose out on vital revenue for their communities as these event.

The gentleman yields back, given the fact the votes have been called, series, the committee should now stand in recess until uh the

Mm.

until five minutes after the last So I encourage members to return here uh to the hearing room at that point. We are in recess. All right, I know the ranking members in route. Uh, but we're gonna per since we have another series uh of those coming up, we're gonna go ahead and get started. Um uh next on the list in terms of uh of uh attendance at the beginning uh is Mister Rose from Tennessee, recognized for five minutes.

Thank you Chairman Thompson and and Ranking Thank you so much for sli Member Craig for holding the important hearing today,

Yeah.

and thank you to Chairman Selig uh being here with us. Mister Chairman, the committee has for years heard about the There you go. danger of the customer protection fund's potential insolvency. Not really, no, no, we have uh In fact, Congress passed legislation creating a separate account to allow the operations of the whistle-blower office to continue in the event the fund becomes insolvent but this is a temporary fix which Congress keeps

Congressman, thank you for that question. Congressman, thank you for that question. I believe in the whistleblower. I believe in that. It's really a critical program for people that are afraid to come forward when they have information that could help us uh prosecute a case, whether it's in a uh m m market manipulation matter or uh a registration failure, or anything else, it's really important that people are willing to come forward with information that could help further an investigation. I do have a concern that if these incentives are not provided to the marketplace, that people will choose out of fear of retaliation

Mister Chairman, do you support a permanent legislative fix to the CPF and whistleblower office funding issues additionally what does Congress need to do to address these issues with the fund?

Well, Congress,

We've also received concerns uh or heard concerns

Congressman, we're on track to provide several rewards and the days to come and I believe will exceed the amounts paid out over the past two fiscal years so we're we're certainly taking this very seriously but it's very important that we continue to uh support the fund uh with uh with adequate funding.

Mr. Chairman, you're no doubt aware that CFTC's authorization of appropriations last expired uh back in two thousand thirteen. How how does operating without a current authorization affect the commission's ability to plan long-term and to attract, retain, and retain specialized staff and invest in modern oversight tools?

Well, the CFTC under my leadership continues to be an effective market regulator, and we will continue to do so, as

Thank you. And in the commission's March twelfth, twenty twenty six prediction markets advisory, staff noted that sports related event contracts are generally consistent with when the settlement outcome depends on the aggregate performance of multiple participants over an extended period of play. Does this language indicate that it is the commission's view that proposition style bets, those not dependent on performance over an extended period or an aggregate outcome would not satisfy core principle three and therefore may fall outside permissible event contract activity under existing CFTC's

Well, Congressman, the CFTC staff has put out this advisory that you're referencing that gives some considerations for the marketplace for our exchanges that are self-certifying contracts to consider as they're evaluating contracts and putting them up for self-certification we do have an advance notice of proposed rule-making out that solicits feedback on this issue among others and we're hoping to provide more concrete rules and regulations around the self-certification process.

Thank you, Mister Chairman, I yield back.

Thank you, gentlemen. Gentleman yields back. Now recognize the gentleman from Illinois, Mister Sorenson, for five minutes.

Thank you, Mister Chairman. Um and thank you, Chairman, for being here. I appreciate your time and being forthright with us here in the committee today. I represent Illinois seventeenth district. Now we're far removed from the big city of Chicago. Um it's a tough place to live, um but we persevere like no one else. It's that part of America where if you put in a hard day's work and you come home and you're proud of what you accomplished. Um, this is also a place where people make just enough to get by these days. Uh, in my neighborhood, we try to put a couple of bucks into a savings account, but we don't have the money to trade stocks or bet on what could happen in the future. You know, I understand what my neighbors feel when they tell me how mad they are when there are our rampant insider trading here in Washington DC. Because, my back home should be able to trust the people in Washington, D. C., and trust that you are going to hold them accountable. But now we've got prediction markets and get-rich-quick schemes that are only realistically available for people, who are now in the know. My neighbors are not in the know. There's no limit to what someone can make money on these days, from how long a White House press briefing will last, or the ramifications of Trump's war in Iran. To be honest with you, it's sickening. And in Illinois, home to one of the CFTC's regional offices, reports say that every one of the investigative attorneys have left the office. Yesterday it was reported by Bloomberg that the CFTC is launching an investigation into oil feature contracts that enriched poten uh potential insiders. Just as Donald Trump went to war with Iran, will you tell this committee that you will hold to account everyone who violated the law, even

Congressman, as I was saying in my opening statement just uh about an hour and a half ago, we have a zero tolerance policy when it comes to insider trading, fraud, or manipulation, and we will take action against any bad actors in our markets.

I appreciate your words. You have an incredible opportunity to um rebuild the trust that was lost. What is the most important step that you're taking? And, and no jargon, I mean, Uh, speak to me as if you're speaking to the thirty nine hundred people in Morrison, Illinois.

Congressman, I've made very clear, we will continue to ensure that our markets are well-functioning and that they are free from fraud manipulation and abuse. This is our core responsibility as an agency. We're not going to pursue political pet projects. We're going to focus on market integrity.

I appreciate that. My colleagues have asked similar questions, but I wanted to kind of reframe the issue. Um, so yes or no, given the continued steady growth of industries and

Congressman, as I said earlier, the agency is functioning better and more effectively than it ever has, and this is thanks to the leadership of the president. He has made a mandate to ensure that our agencies are well-functioning and accountable to the taxpayer, and the staffing that we're uh ramping up on is speaks for

Mm. So b b well if you just said that you're working better, then why are you hiring anybody?

Congressman, we continue to bring on talent where it makes sense within the building. We're acti actively recruiting and and hiring, as I've made clear. We have postings on USA jobs, and this is to fill posts that have uh been vacated by uh former staff. That said, we have not let up on our mission. We continue to fight for the American people and ensure that our markets are well-functioning and free of fraud,

Are you and will you be working with international partners to oversee insider trading that gets around your enforcement?

Congressman, we of course on a regular basis are consulting with our foreign counterparts throughout the world. Uh, it's very important that we do so because fraud and manipulation and and market issues span our borders, uh, across our borders, and so we're we're actively in conversations with foreign regulators on a frequent basis.

Last year, Republicans on the Appropriations Committee proposed cutting the CFTC's funding from FY

Congressman, as I've made very clear, we continue to police our markets, we continue to comprehensively surveil our markets, and we will do so with whatever staff we have. We are using tools like AI and automation throughout the building to make the agency more efficient, and I believe it's functioning better than it ever has under my leadership and thanks to President Trump's leadership.

Insider training should be flagged and investigated and it shouldn't matter who you are. If you violate the law, you go to jail, and I hope that you're able to do that for the people who are ripping off the people back home. Thank you. Mister Chairman, I yield back.

Gentleman's time has expired. Now recognize the gentleman from Ohio, Mister Taylor, for five minutes.

Thank you, Chairman, and thank you, Ranking Member, for holding this hearing today and thank you very much, Chairman Selig, for uh being here with us today and sharing your expertise. I represent a very rural district in southern Ohio. Before being elected to Congress, I worked in the County Prosecutor's Office and was a small business owner for twenty-five years in the concrete business. One of my top priorities during my time in Congress has been to reduce regulations and allow people to participate in the economy without the government always bringing down their neck. Chairman Selig as CFTC Chairman, can you describe to me your approach to regulation and how you balance protecting consumers with promoting economic growth?

Thank you Congressman, and it's of course critically important that we both encourage growth and in our markets, but also ensure that there are safeguards and investor protections. We can't have the American people uh paying the price for new ideas and new creativity uh creative activities in our markets. What we're doing to make sure that consumers and investors are protected is enforcing our laws, enforcing the statute that uh is is our key um mission, right, the Commodity Exchange Act, ensuring that the exchanges are doing their job in surveilling the markets and protecting investors, And of course policing fraud, manipulation, and bad behavior.

Thank you, Chairman. Another priority I have is uh making sure our federal agencies operate efficiently to try to match the speed of business, not the plotting pace of government. As Congress works to reauthorize the CFTC, we have the opportunity to make improvements to ensure maximum efficiency toward its mission to promote integrity resilience and vibrancy for the US derivative markets. By all accounts, the CFTC advisory committees serve a great purpose and provide great insight to the commission. from people who utilize the markets every day. But one improvement I think Congress can make is to streamline the advisory committee structure so that all advisory committees operate equally. Currently, the agency has one advisory committee, the Environmental and Energy Markets Advisory Committee, operating with different rules from the rest of the advisory committees. This makes no sense and only makes our government less efficient. I was proud to lead the CFTC advisory committee improvement act with my fellow Ohioan Congresswoman Chantelle Brown. This bill improves the administration of the advisory

Congressman, I absolutely share your view that the agencies should run more like businesses, and we're taking measures to make sure that the CFTC is more efficient than ever before. One of the new uh technologies that we're incorporating throughout the building is artificial intelligence. We've uh authorized the use of Microsoft's Microsoft three sixty five Co-Pilot, which is an AI tool that all the staff are being trained on, and this is going to make their jobs much easier. It's gonna make them much more productive uh in their day-to-day tasks. It's gonna allow them to do things like create new uh types of workflows for um more efficient um operations. We're also making sure that AI and and automation is incorporated through the registration process when new applicants are submitting forms and registration materials. Uh we've also made sure that there's KPIs in place. Uh key performance indicators uh to make sure that when a new application comes through the door there's real accountability and and and real uh milestones that the staff have to meet to make sure these things get done our statute has prescribed timelines one eighty days for most applications and we've gotta hit that we ca it can't be the case that we extend every time when a new application's coming in because we just can't do our job so we're making sure the staff are more accountable that they're more efficient and of course we're hiring up where it makes sense

Since you're here and you have the captive audience, are there other areas where Congress could be helpful to the CFTC in operating more efficiently as I appreciate uh your testimony today that it's operating more efficiently than it has in recent years, but are there other ways we could be helpful?

Well of course we we appreciate your support for the agency. We are performing really mission critical tasks of of ensuring that our markets are well functioning and have uh appropriate safeguards

I look forward to that and thank you again, Chairman. Uh, yield back, Mr. Chairman.

Gentlemen, yields back. And I thank the gentlemen. We're next to recognize the uh, gentlemen from Virginia, Mr. Vindman, for five minutes.

Thank you, Mr. Chairman. Chair Selig, thank you so much for joining us today. This hearing couldn't have come at a better time. In recent weeks we've seen countless news stories about individuals making massive profits in prediction markets on bets related to national security. For example, bets on whether Ali Khamenei leaves office before March first, twenty twenty six, whether the US would strike Iran by February twenty eighth, whether the US confirms that pilots the pilots in Iran were res rescued, and when the US would announce a cease-fire I ask unanimous consent to enter into the record an article from April ninth, from the Washington Post, titled "Prediction markets are back on the spotlight this time because of the Iran war."

Without objection.

Just recently the White House warned its staff not to engage in insider training on prediction markets. I'm sure you agree that this is highly concerning and it endangers national security. I'm hoping you can help clarify the seriousness of this issue and I'm not trying to play gotcha. I hope we can work together to crack down on these illegal and dangerous bets. So I'm gonna ask you a few ethics related questions, and I'd like t you to provide a yes or no answer please. Should any government official be allowed to use classified or non-public information to profit f on prediction markets?

Congressman, it is illegal to utilize any non-public information to trade in our markets, uh when you're misappropriating that information.

Okay, so I'll take that as a yes. Um No, no, sorry. I don't wanna put words in your mouth. Could a senior official with advanced knowledge of military operations use prediction markets in a way that could incentivize decisions that endanger service members or compromise national security?

Congressman, as I said, it is illegal to trade on inside information.

Uh, I'm not asking about the legality. I'm asking how the markets can be used.

Well, congressman,

Would that

markets have been used to, uh engage in fraud and manipulation insider trading for centuries.

Okay, so I'll take that as a yes as well. If someone with insider knowledge places a large bet right before a military action, could adversaries monitoring these markets be tipped off to what's coming?

Congressman, I I of course there are instances where bad actors are going to engage in abusive trading practices the purpose of the CFTC.

Uh I'm just asking actually if people monitoring the markets can use that information, bets to uh discern what's gonna happen.

Congressman, of course there are instances where people could obtain information.

Okay.

It is illegal for them to utilize that to engage in

Uh again I think what you're that's a yes, simply. Look, I served twenty five years in the army, and um some of these accounts were opened within days and and weeks, and uh bets were placed within twenty four hours of some of these actions occurring. And twenty four hours in a military-operated is a lifetime. It's a lifetime to either remove highly enriched uranium, it's a lifetime to replace uh and place air defense assets, so this is in fact serious threat to our national security. So you've said you want the US to be a market capital of the world, and that we're watching every trade. Will you commit to ro- a robust enforcement ensuring anyone trading on government or military information is held accountable regardless of their political party?

Congressman, as I've said countless times today, we have a zero tolerance policy. That's zero tolerance. That means that we will hold whoever's engaging in fraudulent, manipulative, or insider trading activity accountable to the American people.

Well, I I think what the this boils down to, and I'm gonna give you credit for uh agreeing with the fact that these are dangerous issues related to national security. So, uh I'm gonna I appreciate your commitment to holding bad actors accountable.

Without objection.

Mm.

So we need to find out who's placing these bets, no matter how high level or well connected. Finally, my office is currently drafting legislation to increase penalties for officials convicted for illegally trading on events contracts with national security implications Such a measure is necessary because the pattern of massive prediction market stakes in the hours immediately before US forces deploy or take action is alarming and dangerous. And I would hope that if you in your in the event that you find that there's wrongdoing are prepared to immediately refer these

Uh gentlemen, his time has expired now, recognize the gentleman from Alabama, Mr. Moore, for five minutes.

Hey, thank you, Mr. Chairman. Uh Chairman Selig, thank you for being with us today. Um I'm proud to work uh the work that c this committee did on the Clarity Act to help give digital assets markets the rules they need to grow in the United States. A lot of that responsibility is gonna fall on CFTC obviously. Can you talk a bit about how the commission

Thank you Congressman, and I applaud this committee's efforts to pass bipartisan crypto-asset market structure legislation as I've made very clear multiple times today I believe that this is

Absolutely.

essential for the country to lead in innovation, and I am very supportive of this legislation. It's been too long in the United States where we've pushed innovators offshore, we've regulated by enforcement, and the lack of clarity around the asset classes just caused it to uh really languish here in the United States. I think that legislation's key both to identify what's a security and what's not, and have some certainty in in the statute as to what is subject to the and what's subject to the CFTC's authority. I also believe it's very important that we register these platforms under a federal regulatory scheme. There has been a patchwork of different state licensing arrangements under the money transmitter laws of various states as well as the virtual currency business laws that have been newly enacted and some states have no laws whatsoever. And so having a federal scheme that's uniform across the country is really essential to protect consumers that are using these crypto assets every day.

And certainly, Chairman, we appreciate the work the Commission's doing um to bring more clarity to digital asset markets but one thing I hear from a lot of folks in this space is the concern that software developers and people building block chain infrastructure could once again be caught up in regulation by enforcement under future administration. Can you talk about what the CFT is doing to help build durable framework t that protects people who are simply building software and not holding customer funds so we do not go backwards a few years from now?

Absolutely. One critical uh endeavor that we have supported over at the SEC has been uh the codification of an interpretation on what's a security and what's not. And the CFTC uh signed on to this interpretation, so it was done through a joint rulemaking. And it clarifies the SEC's view as to which types of crypto-assets are securities, and lays out a very clear taxonomy. And it also has an interpretation related to the Howey test, which has been really the bane of the industry's existence for so long because of the many judicial opinions uh c interpreting the c uh you know the definition of an investment contract. And so this is laid out very clearly as to how the SEC is looking at things. Now we at the CFTC have a view as to what's a security and what's not, and we're starting to implement things like tokenized collateral relief, um clarifying the the um status of stable coins and and how that can be used within our registrants. And so it's really critical that we start to clarify things in the interim But legislation can help lock it in for the long term, and and that's why we're so supportive of that effort.

And I appreciate you again taking time to appear uh before this committee. And the words of your March third X post, Potus is right, the Clarity Act must pass. And I agree. We need future-proof market structure now, so America can lead in the world in innovation under President Trump. I wanna conclude my time by encouraging my colleagues in the Senate to pass market structure and with that Mr. Chairman I'll yield back.

The gentleman yields back. Now please recognize the gentleman from California, Mister Carvajal, for five minutes.

Thank you, Chairman Taunson, and thank you uh Chairman uh Selig uh for being here today. You have a tough job. Uh Chairman Selig, as you are aware, concerns continue to over the use of prediction markets to wager on outcomes involving elections, government activity, war, and other geopolitical events. The CFTC's lack of enforcement on betting in these contexts poses clear risks to public safety, national security, and has fostered conditions for potential insider trading. It has become so concerning that even the White House has warned its staff not to engage in such trading on

Congressman, we're approaching this issue through rule making and

Mm.

we've put out an advance notice of proposed rule making, so I won't pre-judge uh the uh the outcome of that process where we're receiving input from stakeholders throughout the country on these issues. But we will take those comments into consideration and make sure that we're uh adhering to uh the the comments and and make and putting rules in place that are are going to address these concerns.

In your view, are there subjects that should be clearly off limits for prediction markets?

Well Congressman, again I I'm not going to pre-judge the rule making process. I believe that in a free market it's really

Chairman Selig, uh it is alarming concerning to see advertising Mm.

Mm.

that sports betting is legal in California. I know the tribes and the people of California would disagree. Voters reject

Congressman, Congressman, I think it's very important to distinguish I think it's very important to distinguish between when you say gambling style products and derivatives. Derivatives are a type of financial instrument, and as our statute prescribes, they can be traded with a broad range of different underlying assets. And it's very important that we continue to oversee these markets comprehensively, whether the market is a a sports related derivatives contract, a political derivatives contract, or a derivative on corn or grain. These are derivatives instruments. They trade on federally regulated exchanges with order books, with clearing houses, and all the investor protections that you would

Has there been any instances of fraud that you have found to date?

Yeah.

Chairman Selig, Chairman Selig, uh with the increasing number of questionable trades taking place as recent, uh with the increasing number of questionable trades taking place as recent, there are growing concerns that those placing these bets may have insider knowledge. there are growing concerns that those placing these bets may have insider knowledge. Whether it's the trade in which a user reportedly earned over four hundred thousand dollars by correctly betting on Nicholas Maduro being out of office just hours before the operation or the account that made hundreds of thousands of dollars by wagering on the US strike in Iran and or the removal of Ali Khamenei, these incidences raise serious concerns. Many Americans hear about these trades, which appear to resemble potential insider trading, but hear little about

Congressman, they will be held accountable. Okay. We are ramping up our enforcement program. We have an excellent Director of Enforcement in David Miller, who is uh both former CIA and former Southern District of New York Prosecutor. And he will be building out our team. And uh we are a cop on the beat. We'll make sure that those who engage in bad activities are held accountable.

Thank you. I yield back.

The gentleman's time has expired. I recognize the gentleman from Iowa, Mister Nunn, for five minutes.

Well, thank you, Chairman Thompson. Thank you, Chairman Selig. You bring a wealth of experience, both at your time at the SEC and certainly at the Commodities and Future Trading Commission. Guys like me back home in Iowa, we appreciate this, because here's the reality, I've got a host of eighty-seven thousand farm families who wake up every morning, not knowing what corn or beans is gonna look like until the closing bell. And that is what they look to the CFTC to be a leader in. And just as a point of reference here, bo- uh corn's at four fifty-six a bushel and uh beans are up to eleven sixty-five. We're gonna ho- hopefully jack that up before uh closing Bella Day. Look, the reality here is that I'm encouraged by your early focus on reducing regulatory burdens, but I wanna make sure that we keep the plow pointed in the right direction, as it were, because farmers and ranchers deserve the CFTC that stays laser focused on market integrity, accessibility, and protection against manipulation. So, as you get to work here, we wanna be part of your team as you march out with the Ag Committee. Now, as we represent a number of farmers who depend on future and option to mitigate risk, I was glad to see that you have relaunched the Agriculture Advisory Committee. That is a direct investment making sure that ag continues to be at the forefront of what the CFTC is doing. It's meaningful and it signals that you're headed in the right direction. I'd also like uh y- to make sure All of the discussion today has been on prediction markets for the most part. I wanna hear from you. Where does farm and production commodities rank as a list of your top priorities?

This is the top priority. The CFTC grew out of the Department of Agriculture. We have our roots in that community and we'll continue to service it. As I said, the agriculture community will always have a seat at the table in this administration.

That's exactly what I wanna hear and I know that makes our uh farm families very happy to hear cuz we've had a great relationship I'm gonna transition to something that my senior senator, Chuck Grassley, who twenty years ago I had the privilege of working with, has made it his number one priority and an item we're working on together.

Yeah.

This is the whistleblower fund. Now, Chairman Siegel, um Senator Grassley has worked to strengthen the CFTC's whistleblower efforts and whistleblowers who have done everything right, challengingly have not been paid, some waiting more than a year for the award from the office itself to determine what they were owed.

I believe strongly in our whistle-blower program. I'm always concerned that there's a a risk of retaliation if, uh, you know, when people are fearful to come forward because they're gonna be retaliated against. And so we've gotta protect that fund and and make sure

Mm. I'm heartened by that and I'm also heartened by your staff who I know is also fully committed to this as well. We wanna make sure we're all doing the right thing. When it comes to your background in both the SEC and CFTC harmonization, I'd like to say thank you for reducing the duplication between these good markets. Could you talk to us a little bit about one of the top areas where you feel you can move the most rapidly in eliminating inconsistent requirements under the existing authorities before you?

Absolutely. One area that we're keenly focused on is substituted compliance. So for too long duplicatively registered entities, such as a broker-dealer, FCM entity, that's both a broker on the C SCC side and a and on the CFTC side, have been strangled with these different regulatory requirements. And working together, we can knock out some of these requirements that are duplicative or inconsistent in some cases still making sure there's no gaps,

And I think that will help not only eliminate the duplication, And I think that will help not only eliminate the duplication, but also the timeliness in which we can execute on that. but also the timeliness in which we can execute on that. That is a uh encouraging hearback. Look, I'll end with this, small Iowa producers are facing higher costs, fewer intermediaries, and a complex uh products. As you talk about vertical integration, market structure reform, from your perspective, whether it's a hog farmer in Altoona, Iowa, or a crow crop grower in Red Oak, what does that actually deliver to the little guy with this type of integration?

Well, this is critical for everyday Americans. When you're using the derivatives markets to hedge risk, you have to go through an intermediary, and the more regulation we have on these intermediaries, And some of them, as I mentioned, are are both safety C and SEC regulated.

That's right.

So the more duplication and kind of regulatory burdens, that gets passed down to the market participants, the farmers, the ranchers, the producers, and then the consumers who are buying their goods. So this is going to make our markets better and it's gonna reduce costs for everybody.

Keep up keeping the farmer first. Thank you very much. I yield back my time, Mr. Chair.

Gentlemen, his time has expired. Uh, I now recognize the gentleman from Illinois, Miss Jonathan Jackson, for five minutes.

Thank you, Chairman Thompson. Uh, thank you, Chairman Selig. As you know, um, I'm sure section three forty-two of the dot, Frank authorizes the Office of Minority and Women inclusion at all other financial regulators, including the SCC where you previously worked. The only federal financial regulator without a statutorily authorized OMWI is the CFTC. At previous hearings before this committee, former CFTC, Chair Russ Bennett, explain how the CFTC's OMWI had improved the agency by establishing partnerships with minority serving institutions and rural colleges and universities. Given the good this office has done, it is a shame that your predecessor, Acting Chair Carolyn Pham, appears to have done away with the OMWI. It is no longer appears in the CFTC's website, the outreach for minority and women institutions or on its organizational chart, or at least as a separate office. I ask you a question. Are you willing to return the office of minority women um back to the CFTC or do you support the outgoing acting chair's actions?

Well, Congressman, it's very important that we're accountable to the taxpayers and that we're using our resources and staffing the building effectively. Um, so of course we're considering um each office

Would you be willing to comply with the statutory uh compliance of other offices in the financial regulation? Okay, thank you, let me reclaim my Thank you for that. As we talk about the greater transparency that the CFTC wants to do for robust price discovery the mechanism the careful development of derivative products, now we're going on to the predictive markets. We're talking about supporting hedging uh without undermining the market integrity. Talking about the liquidity, supply chains, and I used to trade at the Chicago Board of Trades so I'm very familiar with this. You're currently the only commissioner at the CFTC, correct?

That's great.

And previously there were five commissioners. Is that correct?

At times there have been five, at times there's been one, there's been two, uh various uh numbers throughout the years.

Considering the um enormity of this job, do you feel that you could potentially be overwhelmed?

Congressman, I am performing the role in a very effective way. I'm not concerned about the lack of commissioners, but of course this is a decision for the president, and to the extent he appoints additional commissioners, I look forward to working with him.

In the swap markets alone, there's over four hundred trillion dollars of notional value, and we're looking at from all the sophistication with critical minerals and supplies. How would you say you prioritize how you look at the markets and the regulation necessary every day?

Congressman, I'm lucky to have a large building filled with lots of dedicated career civil servants, and so we are comprehensively looking at the markets, whether it's critical minerals, energy, agricultural products,

Thank you so much. Do you foresee any potential crisis on the horizon that we may be confronted with in this new world of rising energy cost as well as uh conflicts?

Congressman, what's important is that we're surveilling these markets. We of course uh are a cop on the beat. We're making sure that to the extent there's any sort of threats to the markets, whether it's fraud,

Well, just like we have price discovery, um, the Office of Minority Women and um the inclusiveness, that was for talent discovery.

Mm.

The two off corridors have been segregated because of culture, because of history, because of time. And if we're going to recruit the best, have the best, I think that it would be of a great value to yourself and to this nation. If you embrace the uh previous work of the officers of uh minority women and inclusion to have more talent discovered, there may be people that can offer more talent that will come from um untraditional uh avenues that could

Gentleman yields back. Now recognize Doctor Baer from the State of Indiana for five minutes.

Thank you, Mr. Chairman and Ranking Member. Uh Really appreciate the opportunity to be here today with you. And Mr. Chairman, thank you for being here and sharing your input with as we make these kind of decisions. But anyway, uh my question deals with this. Uh Back in June of last.

Congressman, Congressman, unfortunately under the prior administration unfortunately under the prior administration there was a focus on rethinking office space, there was focus on rethinking office space, and uh, and uh, a culture of work from home and flexible hours and the president has been very clear that it's back to the office and uh has said so through executive order so we're focused on working together with GSA to identify uh a proper office space that's going to be able to house as many of our workers as possible um we want to make sure that we're close to a hundred percent in line with the president's executive order so we're working hard to identify a proper office space and we'll be be uh moving in as soon as we uh are complete with that process.

So I understand from that you're still moving ahead, it's just you're l- you're getting lined up with the rest of the requirements.

Congressman, we we are uh able to to stay in our current space and we're evaluating new space uh for for the future. Um but rest assured we'll make sure that we have adequate office space so that everyone can be in the office that wants to be.

So let's turn to another area then. Um you know I represent a rural district where agriculture is the backbone of our Our farmers depend on stable, transparent commodity markets every day to manage risk and stay in business. And so we're also home to Purdue University, a leader in agriculture and s- data driven research that helps shape the future of these markets. Given my background in science and my district's deep ties to both production agriculture and innovation, I'm particularly interested in how the commission's balancing its focus on emerging markets like digital assets and new trading structures And while continuing to ensure that traditional producers have a fair access to reliable risk management tools. And so with that, uh, my question deals with, uh, with how is the, how is the s- uh, CFTC ensuring these markets remain transparent, liquid, and free of manipulation?

Congressman, we take this responsibility very seriously. We've got to comprehensively surveil our derivatives. markets whether it's markets for digital assets grains metals or anything else uh we don't discriminate on the product we're making sure that the markets are well surveilled and we're policing fraud manipulation insider trading in all of these markets we are working to ensure as well that innovators are able to develop their software systems here build their new markets here in the united states rather than pushing that off through enforcement um so part of our mandate is responsible in

So I'm glad to hear that because you recognize how important, you know you're dealing with with farmers' lives when you're talking about and their li li their income and livelihood. So I'm glad to hear that. Um you know one quick one quick last question. You and how's the how has the commission then

We're taking working together with the agricultural community as a top priority. Mm-hmm. We have uh for the first time actually, it's it's very surprising, uh put out an agriculture web page on the CFTC web site. Um and we're soliciting feedback from the full spectrum of participants in these markets and farmers ranchers and producers are regularly coming in I have appointed a a senior agriculture advisor in my office. Uh, we've also built out as as you mentioned the agricultural advisory committee, which provides a more um robust uh venue for people to provide commentary to the commission through reports. Uh, we're also taking regular meetings with with these folks in in my office and throughout the building. So it's very important that all of the agricultural community feels welcome, uh, back at the commission. We're here to help and and, uh,

Thank you, and I must tell you, you can share that uh I had a lot of producers that came to the Ag Day that the president had, they really enjoyed.

Uh gentlemen, you all are back.

Uh you're back.

Now recognize the General Lady from Connecticut, Miss Hayes, for five minutes.

Thank you, Mr. Chairman. Thank you for being here today. In December, the Connecticut Department of Comun- Consumer Protection issued a cease assist order to Kelsey, Robinhood, and Crypto.com for conducting unlicensed online gambling specifically sports wagering in Connecticut. States that ha- that have legalized sports betting have rev- regulatory frameworks to protect the integrity of the sports wagered on, as well as consumer protections, such as resources for gambling addictions. Uh the D P D C P gaming director, Chris Gilman, stated these organizations were "operating outside of a regulatory environment, posing a serious risk to consumers who may not realize wagers placed on these illegal platforms offer no protections for their money or their information. Chairman Selig, this was around the same time you were sworn in as the chairman of the CFTC. And under your leadership, the CFTC has filed a lawsuit against three states, including my home state in Connecticut, for attempting to regulate online gambling within their jurisdictions. As you know, more than thirty-four states States and territories have filed amicus briefs asserting their regulatory authority over prediction markets. In your short tenure as chairman, you have clearly and publicly expressed your views on the jurisdiction of CFTC in interviews. You recently said, you recently told Coindesk that the agency will continue to defend its exclusive regulatory authority to oversee prediction markets in court, specifically saying, quote, " It doesn't matter if it's on sports, politics, If it's a val if it's if it's a validly offered product within a CFTC regulated exchange, then we regulate that." When the federal government steps in like this, it can undercut the work that states are already um pursuing to protect their residents. Chairman Sealing, would congressional clarity on the roles and responsibilities of states regarding prediction markets help resolve this ongoing legal dispute? And are you willing to work with Congress in a bipartisan manner to clarify

Congresswoman, I I appreciate uh the concern for state's rights and all of that, but the statute is very clear that we have the exclusive regulatory authority when it comes to commodity derivatives that are offered on a designated contract market. We will continue to assert ourselves in litigation to defend that right. Of course, we're happy to discuss policy.

Well, Well, it's interesting, it's interesting, it's interesting that you bring up an advanced notice of proposed rule rulemaking it's interesting that you bring up an advanced notice of proposed rule rulemaker. for public comment that went out seeking feedback on how the agency should proceed on the issues of jurisdiction that you're talking about but given the extensive lengths to which the CFTC has gone to block state regulatory authority over prediction markets I'm concerned that your organization will not give this feedback full consideration um during the rule making process and in fact today you've said that you're not going to prejudge the public comment period. So can you tell me today how you

Well, Congresswoman, there's two separate issues here. There's the issue of our jurisdiction, which in my view is very clear, but this is of course working its way through the courts and part of this is being argued today in the Ninth Circuit. The second issue is the policy. We're very happy to engage with anyone

Can you repeat that?

Mm.

When a state starts

Start suing our registrants, which is what we've seen. And that just wastes your own state's taxpayer dollars in suing participants that are complying with federal law. So, if you want to fight with us, we'll fight with you in court. But the real uh work should be done in the policy spectrum. Comment and comment, and we'll work with you all to get the policy right.

Well, thank you. I appreciate that. But I just would remind you that uh state's attorneys generals are also elected by the people in those states and they have a to ensure that they're fighting for the best protections for their constituents as well. I yield back.

General lady yields back. Uh, now I'm pleased to before, uh, um, pleased to recognize our newest member on the House Agriculture Committee, David Valadao, uh, from Cali- dairy farmer from California, has, uh, uh, joined the committee, and the gentleman is recognized for five minutes.

Thank you, Chairman Thompson. Thank you, Chairman Selig. This is Michael. Um, bad thing about being the newest guy on the committee is you're, everyone's already asked all the questions you wanted to ask, so. Uh, but I do wanna touch on a f a couple things, and I appreciate you being here. The ability of traditional commodity contracts to self-certify is absolutely vital to farmers, ranchers, producers, energy suppliers, and others who need to hedge markets. And uh, and I know that other aspects of this has been touched on, but how can the CFTC ensure that the integrity of the self-certification model

Well Congressman,

Mm.

it's a pleasure to be able to testify before you as your first uh hearing. Um, self-certification's absolutely vital, i it's a really great innovation that's come uh in the commodities markets through this Congress, and it allows us to quickly, as an exchange, certify products to the CFTC without having to go through a full process of engagement with the staff. Now it's uh critical that the exchanges take that responsibility to heart, and that they evaluate each product to ensure that it's not readily susceptible to manipulation and meets our standards. And we work with the exchanges on that. We've done a a great job under my leadership in providing guidance. We recently put out an advisory for event contracts, but in prior administrations, Unfortunately there's been a lack of clarity and I've inherited a lot of these contracts in the market so we're working quickly to ensure that there's uh protections for investors that the exchanges are doing their job and uh we very much appreciate the self-certification process because it allows for innovation in our markets.

Well and in the ag world, making sure that you can protect or at least um protect from uh any of the risks out there on on uh on the pricing side, especially when you grow as many different commodities as we do and I mean, Under the current statute, the CFTC has the authority to uh determine whether or not an event contract is contrary to the public interest. The statues go on to list such things as war, terrorism, gaming, and assassination as reason to not list a given contract.

Mm-hmm.

The CF CFTC has taken action to block events. Is the CFTC uh taking action to block events from being listed that seem to fail?

Well, in our regulated markets, we have not allowed for any war, terrorism, and assassination contracts, and we're evaluating. This is why we've put out an advance notice of proposed rule making, and I won't prejudge that, where we're evaluating the the questions as to what the public interest analysis should look like and what sorts of products, uh, are not allowed in our markets and which ones are. So this is certainly something we're considering and we'll continue to consider and and we're optimistic that we'll get some very

Alright, and then just one last one, um you said on the record before that uh it's vitally important for CFTC to look at the courts when it comes to constituting gaming on prediction markets and more recent statements uh it seems to have changed a little bit. And I just wanted to give you an opportunity to address that if you had anything to add to that.

Well the question of gaming is one that's very complex. So there's uh various interpretations as to what should constitute gaming.

Well I appreciate your time and uh I've got no further questions, so I'll yield back. Thank you, Chairman.

Chairman yields back. Now please recognize the General Lady. From Maryland, Miss Maclean Delaney for five minutes.

Thank you for being here today, uh Chairman Selig and I represent Maryland's sixth congressional district, uh and I think I'm the last one on this, so thank you for your um you know your your willingness to to be so um um responsive. Uh the CFTC's work as you know is essential and Marylanders in the sixth district are facing uncertainty from tariffs and bottom markets to more frequent national disasters, and they do rely on stability in the derivatives market to manage that risk. Um as the sole regulator overseeing these and I do hope that there are four more that soon join you there to to assist with that work, uh the CFTC is key to keeping supply chain strong, food security is national security, and you know our producers, our farmers need transparent, liquid, well-regulated markets to manage prices. Um you also oversee the digital asset black chain space, and I'm proud that we advanced the bipartisan Clarity Act, including several of my amendments to strengthen consumer protections and agency durability. Um, I encourage you to continue to work with Congress to empower the CFTC to develop a transparent principle-based framework to oversee crypto markets in the US and working with you Congress must establish clear doable rules for digital assets that foster responsible innovation and also protect our consumers, right? So to do this we must move from by enforcement approach at the SEC to as I said principle-based framework that provides market clarity supports market integrity and allows responsible actors to operate and this includes empowering you with appropriate authority over that I look forward to this work in this Congress and future Congresses but I just wanted to put that out and in the future of time I'm submitting some um questions for the record on that um moving on um Chairman last year I introduced along with Congressman Messmer the bipartisan and CFTC charitable organization regulation exemption act of twenty twenty five I think he raised it earlier and I just wanna lift up that bill again, I really think it's an incredible one and many of our churches have um reached out to us thank you for your commitment to working with us on this issue and ensuring that charities can responsibly diversify their portfolios and

Mm-hmm.

protect their investments from market volatility um in the interest of time, I will also um submit some uh questions on that but really work on that, 'cause it's really important. Um and last, I'm gonna talk about energy and long-term durability. Um as many of my colleagues have said, the uh energy futures market has experienced significant shocks over the past few weeks. The volatility has real consequences for farmers, for families, um and these markets rely on trust and transparency. Your responsibility is to protect um and prevent these destabilizing conditions and root out fraud and abuse. Um and the President's budget does though, significant increases in its budget, and I assume that these resources will be tagged for part of that. Um uh you know, building on some of uh Rep Vintman's questions, 'cause I wanna get to it, uh about these special oil trading um futures that were aligned with major developments in the Iranian conflict, and most notably roughly five hundred million in oil futures were traded just hours before the strikes on Iranian energy infrastructure on March twenty third and this really raises questions about market integrity. And you spoke to zero tolerance on, you know, this type of um this type of uh trading. I'm concerned about how the CFTC can maintain this long-term stability with, uh, global shocks, and then also deal with this. So my question is, how would the administration's additional resources help the CFTC maintain durable predictability and capacity in our energy markets but also just turmoil, and rain and corruption? And you said something

Well, Well, on your first question related to enforcement, on your first question related to enforcement, we are building out even more comprehensive we are building out even more comprehensive and strong safeguards around uh surveillance. and strong uh safeguards around uh surveillance. So, that is going to allow us to catch bad in the act and make sure that our enforcement staff are able to then prosecute the cases with the best uh information and the best data on what's occurring in our markets. So that's a key priority, and we're bringing on some new talent to help build out those systems, but we've got really strong systems in place as it is uh but of course you can always tweak those with new technologies and and new opportunities uh w in terms of third-party software systems. In terms of AI, we're starting with some of the, you know, uh Microsoft three sixty five products that I mentioned that it will allow our staff to start incorporating AI into their workflows and this is gonna make them more productive so that they can of course focus on their day-to-day tasks and also uh manage things using um automation and and software tools so so that's a key priority of ours expanding the use of AI throughout the building um and there are also software systems and tools that can al allow us to pick things up faster um what whether it's surveillance or otherwise using AI

Okay.

Be helpful.

Chair Lee's

Thank you, I yield back.

Chair Lee's time has expired. Now recognize uh Congresswoman Brown from the State of Ohio.

Uh I think I am actually the last person, so thank you uh thank you Chairman Thompson.

You are.

Uh, Chairman, thank you for being here today, the CFTC's last reauthorization expired in two thousand thirteen. Since then we have seen the responsibility of the agency expand without any additional resources or authorities in order to respond to them. These are serious concerns that need to be addressed. as the commission absorbs and Congress gives it a larger regulatory role. So let's be clear, I support innovation. However, I am deeply concerned about current and growing gaps in the existing regulatory regime and the lack of investigation from the CFTC into unethical behavior. Public reporting has described highly suspicious well-timed trading ahead of the US Iran ceasefire announcement. Reuter Reuters also reported the White House warned staff not to use their position to place market bets amid concerns about insider trading and suspicious trading around Iran related events. This raises serious questions around public trust and corruption risk when markets are tied to government actions, political outcomes, diplomacy, and official decisions. So my concern is simple. As the CFTC takes on more responsibility, Congress needs confidence that the agency has the resources, the staffing, the legal clarity, and the enforcement posture to adequately regulate these markets, allow innovation to advance and protect consumers. So, Chairman, given the Commission's vacancies, expired reauthorizations, current staffing constraints, and growing workload, do you believe the CFTC today has the staff, technology, and enforcement capacity to effectively oversee not only the traditional derivatives markets, but also digital assets and rapidly expanding pr-

Congressman, we're running more efficiently and effectively than ever before, thanks to right-sizing things within the building, and this is all thanks to the president's leadership. We are a cop on the beat. We're policing fraud, manipulation, insider trading, and I think your allegations to to the contrary are completely unfounded.

Well, that's interesting. What more do you all need from Congress in order to ensure that you have an agency that is well-resourced enough to respond to the different the market innovation that we have seen explode in the last few years.

Congresswoman, we're adequately staffed right now, we're continuing to bring on new staff and the resumes speak for themselves. As I've said, we've brought on real experts from the outside of the uh, you know, private sector expertise, and we're functioning better than ever. It's really critical that we continue to bring on new software systems like AI tools and surveillance uh tools to make sure that we're better suited to, please,

Just a point of clarification.

Yeah.

So you said you're adequate adequately staffed and you're bringing on more staff. So which one is it?

Congresswoman, we are bringing on additional talent where it can be helpful to fulfill our mission, but we have the staff and resources to make sure that we're carrying out

So you do, by your own admission, think that you'd need more staff if you're bringing them on.

Congresswoman, there are certain vacancies that we are filling. Um, that does not mean that we don't have the resources and staff to perf to fulfill our mission. We can always do more as an agency and we'll continue to make sure that we're setting the gold standard for regulation of our financial markets. But we are on the beat and we will continue to perform our vital mission. Congresswoman. Congresswoman, and I very much appreciate that, uh Co Congresswoman, I I very much appreciate that. I it's very important that we have the resources as you mentioned, and I do believe that we have the resources we need to continue to carry out our mission, but of course we're always broadening our abilities to police the markets. Um, in terms of uh uh, sorry, what what was your second question? I apologize.

The guardrails, uh, do you think you have sufficient guardrails to address insider trading?

Yes, in terms of insider trading, our statute's very clear, we have very broad authority to police for fraud, manipulation, and insider trading, and we are b building out our surveillance capabilities to be able to more effectively police in these markets. In terms of the newer markets, like prediction markets,

Okay, thank you. This committee has an obligation to ensure that the CFTC is fully staffed, fully funded, formally reauthorized, and prepared to protect the public from insider training, corruption, and profiteering off the government in action. And I look forward to working with my colleagues to address these concerns. Thank you for indulging me, Mr. Chairman.

So all these time has expired. Uh before we adjourn today, I invite the ranking member to share any closing comments that she may have.

Thank you, Mister Chairman, and thank you, Chairman Selig, for your participation today. This committee takes seriously its responsibility to oversee the CFTC's work, and I believe today's discussion has helped highlight both the challenges and the opportunities facing our agricultural producers, retail investors, and the As ranking member of the committee, I'm constantly reminded of the vital role our farmers, ranchers, and rural communities play in our nation and economy, and of the volatility that they have endured since President Trump has taken office. At the very least, they should be able to trust without a doubt that America's financial system and markets are reliable, stable, and impartial, and that the regulators who take enforcement actions are capable and equipped to look out. for the American people's financial interests without political interference or favoritism. Allegations of insider trading on prediction markets are serious concerns, and today's discussion made clear that there are steps the CFTC and Congress must take to ensure market integrity, protect consumers, and meet the needs of businesses that use commodity markets to hedge risk. It also is made clear that we need more than just you at the commission, and I would encourage the administration

Thank you, thank you, member. Uh, Chairman Selig,

Thank you.

thank you so much for your time, your leadership, your expertise. Uh, much. appreciate it. I thought it was a a very good hearing. We touched on a a lot of different issues. Um, uh, we look forward to working with you and your team, um, at - in the critical role that you have. Um, and and an evolving role, uh, obviously with digital assets, uh, with, uh, uh, you know, with the - the role making in terms of the prediction markets and where that - where that may go uh - I appreciate the fact that you're using those. those listening skills uh through the role making process to uh to make it in informed decisions. Uh the ranking member and I will be uh will be sending a letter to the uh to the White House, just encourage them to you know promptly fill those commissioner positions with qualified individuals, making sure both majority and minority uh is uh is represented. Uh we get you some talented folks there which I know that you'll uh uh work with and deploy to to help fulfill the mission. And with that it uh um we just really appreciate your time today um and your your testimony. So under the rules of the committee the record of today's hearing will remain open for ten calendar days to receive additional material and supplementary written responses from the witnesses to any question posed by a member this hearing of the committee on agriculture is adjourned.