President Donald Trump’s pick to lead the Commodity Futures Trading Commission, Michael Selig, faced questions from lawmakers on a range of issues, including whether the agency needs more funding to act as the main regulator for digital assets and how he would prevent another “FTX” incident.
Selig responded to lawmakers’ questions on Wednesday during a Senate Agriculture Committee hearing, giving a glimpse into how the CFTC would regulate digital assets under his watch.
“We need clear, simple guidelines,” Selig said. “We need consumer protection, and we need to stop with the regulation by enforcement. This is a real opportunity to develop a framework that can allow for software developers to thrive, for new exchanges to crop up that are going to protect investors and have the types of controls that you would expect in an exchange and make sure that we have the right disclosure and requirements that we have typically in our financial markets.”
Trump tapped Selig to lead the CFTC in October following a rocky nomination process for his previous pick Brian Quintenz, policy lead at a16z. That pick faced criticism from some industry insiders, including Gemini’s Tyler and Cameron Winklevoss, over concerns about conflicts of interest. Two scheduled votes to move forward with Quintenz were canceled over the summer, and his nomination was ultimately dropped.
Some in the crypto industry voiced disappointment in the news that Quintenz would not be the CFTC chair, but also said that Selig would be a solid chair. Selig currently serves as chief counsel for the Securities and Exchange Commission’s Crypto Task Force and was a partner specializing in crypto at the law firm Willkie Farr & Gallagher.
CFTC at the center of crypto bills
If the Senate confirms Selig, he will lead the agency during a pivotal time as lawmakers look to put the CFTC at the helm for crypto regulation. Bills in the House and Senate would give the agency broader authority over the industry.
The Senate Agriculture Committee released its long-awaited draft legislation earlier this month to regulate the crypto industry at large. It has bipartisan support, but also has brackets throughout reflecting “unresolved issues,” and must be reconciled with proposals from the Senate Banking Committee.
On Tuesday, Senate Banking Committee Chair Tim Scott, R-S.C., told Fox Business that he aims to have his committee vote on their bill next month. A final bill would need to be voted out of the Senate and would also have to be ironed out with a crypto market structure bill passed out of the House over the summer, called Clarity, before heading to President Trump’s desk.
Selig said discussions over the Senate Agriculture Committee bill and Clarity are critical. “There’s going to be a lot of work to be done in implementing these statutes, so I really am excited for you all to get the legislation done, and I think these are both great efforts,” Selig said.
Funding and FTX
Selig was also asked repeatedly about whether the CFTC needs more funding. Whether or not the commodities watchdog, which has 543 full-time staff compared to 4,200 at the SEC, has the funding to take on the new jurisdiction of digital assets has come up in congressional hearings.
The candidate demurred a bit and said that once he becomes chair, he would be able to see if the agency needs more funding.
Selig was also asked about FTX, which collapsed in November 2022 after filing for bankruptcy amid a liquidity crisis and fraud allegations. He was asked whether he would “not allow an FTX to happen again.”
“As I mentioned the other day, manipulation and fraud are only bounded by the ingenuity of man and so it’s very hard to always be able to prevent,” Selig said, adding that if he became chair he would ensure that the CFTC is enforcing the law.
Future lone commissioner
If Selig becomes chair of the CFTC, he would be the sole commissioner at the agency, which usually has five. Over the past year, four CFTC commissioners — Democrats Kristin Johnson and Christy Goldsmith Romero as well as Republicans Acting Chair Caroline Pham and Summer Mersinger — have left the agency or announced plans to do so. Pham, a Republican, is now acting chair but has said she plans to leave once a new CFTC chair is confirmed.
Some lawmakers voiced concern about needing commissioners from both political parties to be commissioners at the agency. Sen. Elissa Slotkin, D-Mich., asked whether Selig supported having two Democrats and two Republicans on the commission and what his advice would be to Trump when the president picks the next set of commissioners.
“My role and my job, if confirmed as chairman, is to fulfill the agency’s mission and I believe that mission is best fulfilled when we have a diversity of viewpoints coming wherever we can find those viewpoints,” Selig said.
“I’m just saying for those of us who want to get to yes on a market structure bill, who want to be proactive, having some sense that there’s some oversight that isn’t just going to be you vulnerable to the pressure of the president, as the only one there, is something that many of us will be watching, certainly me” Slotkin said.
The committee is planning to quickly vote on Selig’s nomination with a meeting slated for Thursday.
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