The Commodity Futures Trading Commission has staffed its new Innovation Task Force with five senior advisors drawn from private practice and the agency's own ranks, moving from policy blueprint to drafting actual rules for crypto, AI systems and prediction markets.
The Commodity Futures Trading Commission has named the first five senior advisors to its Innovation Task Force, the small rule-writing unit that Chair Michael Selig has positioned as the agency's main vehicle for putting definition onto three of the fastest-moving areas in financial technology: crypto assets, autonomous AI systems and prediction markets. The announcement came on 10 April and formally transitions the task force from a staffing blueprint into a working shop.
Michael J. Passalacqua — a senior advisor to Chair Selig — will lead the group. The five senior advisors beneath him are Hank Balaban, formerly a digital assets and emerging companies attorney at Latham & Watkins, Sam Canavos, who consulted on regulatory matters for innovative technologies at Patomak Global Partners, Mark Fajfar, a longtime CFTC Office of the General Counsel lawyer, Eugene Gonzalez IV, who covered blockchain and fintech work at Sidley Austin, and Dina Moussa, transferred from the CFTC's Market Participants Division. Three outside hires, two internal; that ratio is itself a signal. The agency wants private-sector fluency alongside the institutional muscle memory that only comes from having sat inside the commission's rulemaking machinery.
Selig's framing in the announcement was deliberately modest. The team, he said, "brings together a leading group that exhibits deep expertise and an enthusiastic commitment to deliver clear rules." There was no grand declaration about reinventing derivatives regulation, and no commitment to a specific timeline for the first rulemaking — which, given how badly the agency has bled credibility on prediction markets in particular, is probably the right tone to strike.
The task force inherits a full calendar. On the same day the hires were announced, the Justice Department and the CFTC itself filed a joint motion asking a federal court to block Arizona's criminal prosecution of Kalshi — the event-contracts exchange that has been fighting state-level attempts to shut it down. A week earlier, the Third Circuit ruled that states cannot ban Kalshi under a landmark federal preemption doctrine — a ruling that handed the CFTC something close to exclusive jurisdiction over prediction markets, but did not tell it what to do with that jurisdiction. The task force will need to produce the guidance that translates the court win into a workable rulebook for sports contracts, political contracts, and everything in between.
On the crypto side, the Innovation Task Force will inherit the messy task of putting teeth on the five-category digital-asset taxonomy that the SEC and CFTC jointly issued on 6 April. That taxonomy answered the decade-old question of how to classify tokens. It did not answer the far harder question of what those classifications oblige issuers and exchanges to do. Balaban and Gonzalez, both with private-practice exposure to token issuers and exchanges, will be the natural leads on that workstream, and their hiring suggests Selig wants the eventual rules to be defensible in front of industry counsel, not just inside the agency.
Artificial intelligence is the wildcard. The task force's explicit remit includes autonomous AI systems that interact with derivatives markets, a category that barely existed in policy terms two years ago and is now among the commission's stated priorities. What an AI-specific rule actually looks like, whether it covers agentic trading systems, model governance at registered firms, or liability allocation when an autonomous system triggers a market event, remains open. Fajfar's institutional background at the Office of the General Counsel suggests the commission expects legal exposure to be the near-term pressure point rather than product design.
The Innovation Task Force is smaller than the task its name implies. Five senior advisors and a leader are not going to draft the whole post-CLARITY Act rulebook themselves, and the CLARITY Act has its own problems — the bill stalled again in the Senate last week over the stablecoin-yield compromise and faces a self-imposed end-of-April markup deadline that nobody in Washington believes will hold. But rulemaking at the CFTC has always been a function of small teams with clear writs, and this is the first time in years the agency has pulled together one with a mandate this specific. The next question is how quickly the group produces the first concrete document. Selig has not said. Industry counsel, for now, are watching the task force's public docket the way options traders watch the tape.
