From 2,500 unchallenged self-certifications to Michael Selig cutting off the CEO of the world’s largest derivatives exchange, the inaugural CFTC Innovation Advisory Committee meeting was peak political theater.
WILLIAMS BAY, WI (JLN) — August 21, 2026: Welcome to the wild world of Washington derivatives politics. Yesterday, I reviewed the video of CFTC Chairman Michael Selig kicking off the CFTC’s Innovation Advisory Committee Meeting and the full meeting chaired by FIA President and CEO Walt Lukken. I might need to spin up whole new MarketsWiki categories to track the sheer volume of political theater. How about [[Category:Regulatory Pandering]], or [[Category:Gensler Rent-Free Zone]]? ([[Category:Regulatory Boogie-Man]] might be added too.)
Selig came out swinging with an absolute power move: a reference to his casual trip to the Oval Office where President Donald Trump jokingly asked if the CFTC or the SEC was more powerful. Selig, playing the loyal soldier, practically winked at the camera and hinted it was the CFTC. This was the second time in two days that Selig had taken a shot at the SEC, which in days gone by would have been the third rail for rank-and-file SEC staff. Selig had previously taken a shot at former SEC Chairman Gary Gensler in the Oval Office meeting with President Trump.
While Gensler might not be on many ex-SEC colleagues’ Christmas card lists, he is still a former SEC chairman, and the CFTC chairman should not be talking smack about anything SEC, even if he used to work there. Of course, many of the loyal SEC people may have been DOGED, so who knows what the internal SEC read is today.
Selig rightfully tipped his hat to the Chicago Board of Trade’s 1848 origins above a flour store. This history lesson proved humorous later for all the wrong reasons when Former CME Group CEO Craig Donohue, now Cboe CEO, and current CME Group Chairman and CEO Terry Duffy bolstered their Merc bona fides by displaying unfamiliarity with Board of Trade origin history. Donohue heard Selig say “flower shop” instead of “flour shop,” as in Gage & Haines Flour Store at 101 South Water Street, where the original meeting organizing the CBOT was held, and made a joking comment about Terry Duffy’s mother’s prowess as a flower shop owner and about Duffy and Donohue being at the 1848 meeting.
Donohue, for his part, gave a polished, professional presentation befitting a veteran CEO/attorney, while making the point that we should pay attention to the gray areas, and pointing to the number of prediction markets listed by the CFTC that, under statutory and regulatory frameworks, are securities. He also argued for the bifurcated regulatory structure in the U.S., which boasts capital markets bigger than the rest of the world combined and a dominant share of derivatives markets.
Duffy thanked Donohue for mentioning his late mother, and mentioned what a great supporter she had been of his exchange participation. For the record, Selig did not correct the error of either Windy City derivatives exchange leader, which could indicate his own surety of the history lesson he just gave.
However, Selig did correct Duffy when he spoke during the last session on prediction markets and rattled off some substandard examples of market manipulation. Duffy specifically mentioned Maduro and Trump’s teleprompter guy, as well as player-specific sports contracts. Selig jumped into the discussion without putting his name card up to be called upon or getting moderator Lukken’s attention. But I guess when it is your house, you can jump right in.
Selig said those manipulations happened on offshore markets, not U.S. markets, and were “fake news,” using one of his boss’s favorite phrases.
Duffy also got into a scuffle with Kalshi Co-Founder Luana Lopes Lara after mentioning Kalshi and the Nathan’s Famous International Hot Dog Eating Contest listed on Kalshi as susceptible to manipulation. That prompted her to reply. She asked Duffy a question: whether the CME had ever had a market manipulation case in its history. Duffy replied that his market regulation department is bigger than her whole company. She shot back that maybe he needs to learn something about efficiency before Lukken settled things down.
Duffy, in his comments, was much hotter than Donohue’s cool. Duffy, when making the market-manipulation case, noted that there have been 2500 self-certifications since the start of the Trump administration, and none have been opposed. He said some violated Principle 3 and were susceptible to manipulation.
“This is not good for our industry,” Duffy said. “This is horrible for our industry. We are not a bunch of carnival barkers at a circus.”
“We are running the most envious markets in the world, in the United States of America,” Duffy said.
Noting that Trump and Selig want to make the U. S. the crypto capital of the world, Duffy said, “We don’t want to chase our own participants out of our markets either.”
Duffy also noted that Kalshi has self-certified a compute contract. At the same time, CME Group’s is being held up for a 60-day regulatory review, while calling for the CFTC not to apply double standards. He also noted that Cantor Fitzgerald, the firm formerly run by Commerce Secretary Howard Lutnick, and Kalshi are now working together. Duffy said, “Let’s call that a coincidence.”
Duffy also asked what the commission is doing to police U.S. market participants’ VPN participation in offshore DeFi markets like Hyperliquid. He also noted that he expects all markets to go 24/7.
Duffy finished his comments with a strong statement befitting his years of market experience, contrasted to the 20- to 30-something entrepreneurs and 36-year-old CFTC chairman present.
“I think it is important for us to go forward as innovators on markets to have a level playing field. And make sure the consumer is always protected,” Duffy said.
“Because the best way to ruin a market, and I guess I am old enough to recall, in 2008 and 09, when the financial industry takes bad behavior, it doesn’t take a step backward, it takes twenty,” he said. “It takes years to respond, to build back the financial system. We have been able to do that, and I hope we don’t go backward again.”
