The CFTC’s Proposed Rules to Reshape US Crypto Markets | CFTC Chair Mike Selig

Mike Selig (0:00)

There was a clear goal to make the United States the crypto capital of the world, and I believe that we've succeeded in that endeavor.

David Hoffman (0:07)

I'm in the strictest financial prison that exists in the entire world, which is New York.

Mike Selig (0:13)

We've proposed first round of crypto exchange regulations to bring market-based regulation to the crypto asset exchanges.

David Hoffman (0:22)

If this proposed rulemaking is accepted and made into a rule, individual spot retail people like me get margin, get leverage.

Mike Selig (0:30)

People come to the United States and say, why can't we trade on margin? So we're creating the rules to allow this to happen.

David Hoffman (0:36)

How optimistic are you about the durability of these rules without any sort of legislation?

Mike Selig (0:41)

We do have a ton of authority as an agency, and we're going to use it. My goal here is to put in place something that is future-proof, something that is bipartisan and has the support of both sides of the aisle. And I think if we get that right, there's no chance that a future administration is going to withdrawal of that, and they'd be taking a huge risk.

David Hoffman (1:02)

We got CFTC Chairman Mike Selig back on the podcast. Mike, welcome back.

Mike Selig (1:06)

Thanks for having me.

David Hoffman (1:07)

Chairman Selig, you were nominated by President Trump on October 27th, 2025 That is just about one year ago, one year of being the CFTC chair. How has the year been? Give yourself a grade, Mike, if you will.

Mike Selig (1:23)

Well, look, when I came into this position, there was a clear goal to make the United States the crypto capital of the world. And I believe that we've succeeded in that endeavor. Today, we've got Bitcoin and all sorts of crypto asset perps trading in our markets. That was once a purely offshore endeavor. Now we've got it here in the United States. We propose, as I'm sure we'll discuss today, our first round of crypto exchange regulations to bring market-based regulation to the crypto asset exchanges, which until today, it's really all been about the state-level payment space regimes. We want market protections for traders in our markets, and we're doing exactly that.

We've also brought on a number of new controls and regulations around prediction markets, which of course is a separate area, but there's a lot of synergy between prediction markets and crypto. A lot of these ideas actually came out of Vitalik Buterin's white paper so many years ago, talking about blockchain-based prediction markets. And so we're looking, of course, prediction markets on-chain, as well as other types of on-chain markets. And that's really been, I think, a great focus for this agency. So I'd give us a high mark when it comes to crypto and prediction markets. And then, of course, although I'm sure less of interest to many of your viewers, we're doing a lot in the traditional markets as well. And I think there was a lot that was done in the wake of the financial crisis that made a ton of sense. And we're continuing to make sure we enforce those regulations and beef them up where needed. There was a lot that really was an overreaction, what I refer to as an autoimmune response to a crisis, which of course, the time might have been warranted, but now it's really been a bit too much. So we're paring some of that back and deregulating as well.

David Hoffman (3:10)

There are two rules that the CFTC has proposed. And these two rules are going to be the entree of this podcast, kind of the main course.

And we're going to talk about regulation crypto asset transactions and regulation crypto asset markets, what these rules do, and how they also work together. Because I think the paring of them is also very interesting. Before we get into them, I kind of want to just zoom out and talk about something that's in the DNA of the country as a whole, which is the debate, the tension between states versus federal regulation. Maybe we can just start at the very beginning. Why is it important for financial markets to be regulated by the federal government, in your opinion, rather than the states? Like, what about the financial industry makes it more appropriate for federal regulators rather than state regulators?

Mike Selig (3:58)

Well, one of the first federal statutory schemes around our markets was actually the Grain Futures Act back in the 20s, which actually predated the securities laws, which came out in the 30s. But in the 30s, we saw with the Great Depression and the financial crisis of the time that markets need a federal regulatory scheme. Oftentimes, you have different state requirements, state by state, and you also have a need for uniformity across those state regimes. So you need to surveil the markets, you need to be able to police bad behavior, you want uniform disclosure. You know, when you're using, for example, whether it's a brokerage, like a Robin Hood, or going directly to an exchange, whether it's in our markets or on the security side, what you want is the same sort of standards and requirements and protections against fraud and manipulation, wash trading and the like, when you go from state A to state B. And that's exactly what the securities laws set out to do in the 30s. And then the commodities laws, which also developed, as I mentioned, in the 20s, but over almost 100 years now, they've been built up and the CFTC was established in 1974 to enforce a federal regulatory scheme for commodities derivatives markets. And that's been expanded over the years to include things like margin trading on spot.