Warren calls weakened CFTC a 'recipe for disaster' as Congress advances crypto legislation

Senator Elizabeth Warren pressed Commodity Futures Trading Commission Chair Michael Selig over whether the agency is equipped to take on a larger role in regulating crypto and prediction markets as Congress advances legislation that would expand its authority.

In a letter sent to Selig on Friday, Warren argued that staffing cuts, declining enforcement activity and growing influence over the agency have left it weakened and stretched too thin to effectively police crypto and prediction market firms simultaneously. 

"A CFTC with fewer staff members, reduced enforcement activity, and expanded responsibilities is a recipe for disaster," Warren wrote.

Warren cited reports that the CFTC's workforce has shrunk by around 25% and pointed to a major decline in enforcement actions since President Donald Trump took office. She also criticized how the agency has handled recent cases involving high-profile crypto and prediction market firms.

Among these was the CFTC's decision to join Gemini's request to vacate a judgment from a 2022 case that alleged the exchange made "false or misleading statements" to the CFTC in 2017 about the risk of manipulation in its bitcoin futures contract.

Last month, the agency ultimately concluded that the complaint against Gemini "should not have been filed" and would not meet enforcement standards as they stand today.

Warren also cited recent reporting that officials who tried to raise concerns about companies, including Polymarket and Crypto.com, were pushed out of the agency.

Selig maintains that prediction markets and event contracts fall under the CFTC's "exclusive jurisdiction," while several states have argued the platforms violate their local gambling laws. This has even led to the CFTC suing multiple states that tried to ban prediction market platforms from operating.

Warren concluded the letter with requests for records related to staff reassignments, communications with prediction market firms and contacts between the CFTC and crypto industry participants regarding the Clarity Act.