CFTC Faces Scrutiny as Staff Were Sidelined in Crypto Reviews

The Commodity Futures Trading Commission is positioned to take broader oversight of U.S. spot cryptocurrency markets under the CLARITY Act, while an investigation found that several senior CFTC officials who raised concerns about prediction-market projects were sidelined, suspended or removed from decision-making.

The CLARITY Act would assign the CFTC responsibility for writing rules, registering spot-crypto exchanges and intermediaries, monitoring trading activity, and enforcing conflict and customer-protection standards. The agency requested $410 million and 650 full-time equivalents in its FY2027 budget submission to support an expanded role in crypto oversight.

The investigation identified three prediction-market matters that career staff questioned during review. In the Polymarket case, staff raised concerns about the platform’s anti-fraud protections before approval under a QCX/QC Clearing no-action path, and a senior official who had voiced those concerns was later placed on leave. Polymarket has described its safeguards as strong.

In a separate matter involving Crypto.com, agency staff documented worries that the firm’s structure could give large trading firms an advantage over smaller bettors without clear disclosure. Those staff members said they were excluded from follow-up discussions. Crypto.com has stated it complies with federal regulations.

For a Gemini-linked plan called Gemini Titan, notes show a draft approval memorandum from senior counsel was circulated while staff review was still underway; the counsel later joined Gemini Titan as general counsel. Gemini declined to provide comment.

Separately, the agency brought an enforcement action in March 2026 against Peken Global, operator of KuCoin, imposing a $500,000 civil monetary penalty and an injunction related to U.S. customer access without FBOT registration; the agency did not seek disgorgement. Records show internal disagreement over the case, including efforts to reduce the penalty from amounts some agency lawyers had expected and calls by senior staff to drop the matter.

The CFTC historically regulates derivatives rather than day-to-day spot trading. The agency’s public commissioners page listed Michael S. Selig as chairman when accessed May 25, even though the CFTC is statutorily organized as a five-commissioner body.

Agency leaders provided a different account of priorities. Selig described the prior enforcement approach as overly aggressive and outlined a renewed focus on serious fraud, manipulation, abuse and insider trading. The White House denied conflicts of interest, and the CFTC declined to comment on specific personnel matters or the handling of individual cases.

Public records show a limited number of digital-currency enforcement actions in the current administration so far: two actions against individual operators and one prediction-market case involving an individual accused of insider trading. The combination of staff-sidelining allegations, commission vacancies and recent approvals for market players has prompted stakeholders to point to institutional changes they say would affect the agency’s readiness, including filling all commission seats, hiring and retaining enforcement staff, adopting enforceable conflict-of-interest rules, and pursuing major-firm cases when facts warrant them.

The CFTC’s expanded responsibilities under CLARITY would require the agency to build registrant categories, surveillance systems, recordkeeping standards, customer-asset rules and enforcement capacity for a market larger and faster than its traditional futures and swaps base. How the agency fills leadership roles, staff positions and policy gaps will shape its ability to carry out those duties.