CFTC Chair Questions Oversight of Autonomous Trading Agents

Commodity Futures Trading Commission Chair Michael S. Selig raised questions about how regulators should oversee autonomous software that trades cryptocurrency for users, including who should register the systems and who is responsible for their actions. Selig spoke at the CFTC’s inaugural Frontier Forum in Washington on October 28. He said existing rules generally assume regulators can identify each market participant and the role that person or firm performs. Autonomous agents complicate that model when they can hold assets, identify trading opportunities and execute transactions on someone else’s behalf. He used a hypothetical household appliance to illustrate the possibilities: a refrigerator could earn Ether staking rewards and use them to pay for groceries, or act autonomously in other crypto-related ways. The example framed a broader question about how rules apply when software, rather than a person making each decision, carries out financial activity. Selig questioned whether developers might need to register and how regulators could identify the customer behind an agent’s trades. One possible approach raised in discussion was a know-your-agent framework, analogous to...