CFTC Establishes New Task Force to Regulate Crypto, AI, and Prediction Markets

Key Takeaways

• The CFTC established an Innovation Task Force focused on developing regulatory standards for cryptocurrency, artificial intelligence, and prediction markets
• Michael Passalacqua will serve as the head of this new initiative, collaborating with the CFTC’s Innovation Advisory Committee
• The SEC and CFTC executed a Memorandum of Understanding to synchronize digital asset regulation and eliminate regulatory inconsistencies
• Collaborative guidance determined that the majority of digital assets — such as stablecoins and digital collectibles — fall outside securities classification
• The CLARITY Act, designed to establish market structure, continues to face delays in Senate proceedings

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The United States Commodity Futures Trading Commission has established a dedicated Innovation Task Force aimed at developing comprehensive regulatory guidelines for cryptocurrency, artificial intelligence technologies, and prediction markets.

CFTC Chairman Michael Selig revealed this initiative during his address at the Digital Asset Summit held in New York City this Tuesday. According to Selig, the task force will establish a direct communication channel between industry innovators and federal regulators.

The task force will operate under the leadership of Michael Passalacqua, who serves as a senior adviser to Chairman Selig. Prior to joining the CFTC in January, Passalacqua specialized in cryptocurrency and blockchain matters at the international law practice Simpson Thacher & Bartlett.

This new unit will function in coordination with the CFTC’s Innovation Advisory Committee, a body comprising over 30 industry leaders from organizations such as Kalshi and Nasdaq.

The CFTC’s initiative follows more than twelve months after the SEC established its crypto-focused task force, which launched one day following President Donald Trump’s inauguration.

Regulatory Agencies Execute Coordination Agreement

Earlier in the month, the SEC and CFTC formalized a Memorandum of Understanding intended to harmonize their regulatory strategies toward digital assets. This accord aims to eliminate the contradictory regulations that had previously generated tension between both agencies.

The agencies released collaborative guidance last week declaring that most digital assets — encompassing stablecoins, digital commodities, and collectible tokens — do not qualify as securities.

This joint guidance established an official “token taxonomy” framework to assist in digital asset classification. It further clarified that cryptocurrency operations such as mining, staking, and airdrop distributions typically do not constitute securities transactions.

Through the MOU, the SEC and CFTC will collaborate on information exchange, unified rulemaking efforts, asset categorization, clearing procedures, margin requirements, and trade documentation.

SEC Chairman Paul Atkins characterized this framework as a “bridge” providing regulatory certainty during the period when Congress develops comprehensive legislation.

A Joint Harmonization Initiative has been established as well, with co-leadership from the SEC’s Robert Teply and the CFTC’s Meghan Tente.

Congressional Legislation Remains Uncertain

Comprehensive digital asset legislation has yet to receive Congressional approval. The market structure legislation, known as the CLARITY Act, secured passage in the House of Representatives during July 2025 but has encountered obstacles in the Senate.

Controversies surrounding stablecoin returns, ethical considerations, tokenized securities, and additional concerns have impeded legislative advancement. The timeline for potential Senate floor consideration remains uncertain.

The CFTC has also expanded its regulatory scope over prediction markets. The commission has claimed jurisdiction over these platforms despite resistance from certain states invoking state-level gambling regulations.

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