The United States Commodity Futures Trading Commission (CFTC) must leave room for financial innovation as the global derivatives market moves into a new phase, chairman Michael Selig has said.
Writing in The Economist, Selig argued that regulators should not simply import or replicate rules from elsewhere if doing so could restrict competition or delay new financial products reaching the market.
“The new era of finance needs innovation, not consensus,” Selig said.
Derivatives such as futures, options and swaps are used by companies, farmers, investors and financial institutions to manage risk and allocate capital. Selig said the global notional value of those contracts exceeds $1.2 quadrillion, while markets overseen by the CFTC account for almost half of that total.
He said US leadership in the sector had been built on competition between markets, robust institutions, effective supervision and a willingness to embrace new technology. That approach has led regulators in other countries to view the CFTC’s framework as a model for derivatives oversight.
However, Selig warned that international agreement on regulation should not, by itself, compel the United States to adopt rules that could limit growth or competition. His comments indicate that the agency may consider market efficiency and the competitiveness of US markets alongside consumer protection when assessing new products.
The remarks are consistent with the direction Selig set out after becoming the CFTC’s 16th chairman in December 2025. In his first public address, he called for clear rules, principles-based supervision and “permissionless innovation.”
Selig has also told CFTC staff to use powers the agency already possesses to update its regulations. That work is taking place while Congress considers legislation that could widen the CFTC’s responsibilities in digital asset markets.
Through Project Crypto, the CFTC is working with the Securities and Exchange Commission to coordinate regulation of products that fall between traditional regulatory categories. Selig has said the initiative should establish lasting rules for cryptocurrency trading platforms and other emerging markets.
The agency has stressed, however, that modernisation will not mean abandoning its central duties. In a January speech, Selig listed investor protection, anti-fraud measures, market integrity and protection against manipulation as continuing priorities. The CFTC has described its approach as an attempt to modernise regulation while retaining those safeguards.
Prediction markets are expected to provide an early test of how that balance works in practice. Binance.US plans to apply for a designated contract market licence, potentially allowing the exchange to list federally regulated event contracts, futures and options for retail customers.
Chief executive Stephen Gregory announced the plan at the Rare Evo conference in Las Vegas. Binance.US was expected to submit its application in August, although approval by the CFTC is not guaranteed.
If successful, the application would take Binance.US beyond spot cryptocurrency trading and bring its event contracts under direct federal supervision. Designated contract markets are required to meet CFTC standards on system safeguards, record-keeping, conflicts of interest and market surveillance.
At the same time, the regulator continues to take action over alleged misconduct on established platforms. Former US Representative George Santos recently settled a CFTC case concerning Kalshi contracts linked to whether he would attend President Donald Trump’s State of the Union address.
An order issued by the CFTC on 31 July required Santos to repay $17,569.98 in profits, pay a $17,500 penalty and accept a three-year ban from trading on markets registered with the agency. Santos neither admitted nor denied the CFTC’s findings.
Selig’s policy could encourage more cryptocurrency derivatives, tokenised products and prediction contracts to enter regulated US markets. It could also prompt financial companies to seek federal registration rather than launching products offshore or relying on less clearly defined legal arrangements.
The central test will be how the CFTC turns its support for innovation into licensing decisions and formal regulation. Applications from businesses including Binance.US will help show how much flexibility the agency is willing to provide while protecting retail traders and maintaining the integrity of the market.
Selig has said the United States intends to remain a major influence in shaping global derivatives standards. Its continued leadership will depend on whether the CFTC can broaden access to new products without weakening its response to fraud and market manipulation.
