CFTC chairman Michael Selig has made clear his intention to defend event contracts, and the CFTC’s exclusive jurisdiction over commodity derivatives.

Speaking on Thursday in his first public speech as chairman of the Commodity Futures Trading Commission (CFTC), chairman Selig said: “Today marks the beginning of a new chapter for the CFTC. One that builds on the Commission’s legacy while sharpening its focus on regulatory clarity, inter-agency coordination, and permissionless innovation.”

“By applying clear rules, principles-based oversight, and harmonizing with fellow regulators, the Commission can help ensure that the next generation of commodity markets develop onshore—continuing a legacy that stretches from the grain pits of Chicago to the digital markets of the future.”

Much of his speech was dedicated to Project Crypto, a new joint policy initiative of the Securities and Exchange Commission (SEC) and CFTC. 

Project Crypto aims to prepare the regulators for the expected passage of legislation to establish a federal framework for digital asset markets.

The CFTC said: “Project Crypto represents a modern model of inter-agency coordination, recognizing that today’s markets do not conform to 20th-century silos. The SEC and CFTC bring complementary statutory mandates, supervisory capabilities and market expertise. Acting in concert, these capabilities become symbiotic rather than duplicative, delivering clarity and principled oversight as market structures evolve.”

The new regulations will be “precise, not punitive”, and narrowly tailored to address material risks “while avoiding the reflex to impose ill-suited legacy structures on new technological realities”. 

“If we fail to provide clarity, innovation migrates elsewhere. If we regulate with a heavy hand, we do not reduce risk, we encourage it,” said the CFTC. “Project Crypto reflects our shared belief that the United States can lead by doing what it has always done best: pairing strong rule of law with an openness to progress.”

Commenting on the furore around prediction markets and event contracts, chairman Selig noted that these markets are not new.

“They have operated within the CFTC’s regulatory perimeter for more than two decades. But, despite their history, many view them as novel or unsettled. That uncertainty has not served our markets well, nor has it served the public interest,” Selig explained.

“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets. Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets and the important role they play in the broader financial system.”

To this end, Selig has directed CFTC staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts, and the 2025 staff advisory which cautioned registrants against offering access to sports-related event contracts due to ongoing litigation. 

He has also directed CFTC staff to draft rules for event contracts, saying: “For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants. That is something I intend to fix by establishing clear standards for event contracts that provide certainty to market participants.”

Selig added that the CFTC is reassessing its participation in matters currently pending before the federal district and circuit courts. “Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he added.

“Finally, I have directed CFTC staff to work with our counterparts at the SEC to develop a joint interpretation on Title VII definitions. This effort would draw clearer lines between certain commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps,” Selig concluded. “Clear, coordinated guidance will allow firms to scale products responsibly and reduce the number of innovations that fall into what [SEC] Chairman Atkins has aptly described as “the no man’s land” between our two agencies.”