WASHINGTON, September 3, 2026 — A senior Commodity Futures Trading Commission official warned during remarks at George Washington University that international regulatory frameworks are struggling to keep pace with increasingly interconnected, programmable and autonomous financial markets, pointing to gaps in supervisory cooperation, financial-stability oversight, global standard-setting governance and market safeguards.
Mel Gunewardena, the CFTC’s Director of International Affairs and Senior Markets Advisor to Chairman Michael S. Selig, said in remarks at George Washington University that markets are moving beyond electronic and algorithmic trading toward systems that are continuous, programmable, composable and increasingly autonomous. The views expressed in the remarks were Gunewardena’s own and did not necessarily represent those of Selig or the Commission.
Gunewardena said tokenized securities, commodities, funds and collateral can operate alongside stablecoins and tokenized deposits, while smart contracts, oracle networks and cross-chain interoperability could transform how liquidity, collateral and risk move through the global financial system.
Tokenization, AI and market infrastructure
Gunewardena described the convergence of tokenization, continuous settlement, machine-executable infrastructure and artificial intelligence as part of a broader transformation in global financial markets. Artificial intelligence and large language models are moving beyond predefined rules toward systems capable of interpreting unstructured information, reasoning across multiple inputs, making decisions and increasingly acting autonomously, he said.
Gunewardena described a scenario in which a tokenized asset could trade continuously, settle through a stablecoin, rely on smart contracts and oracle networks, reference a traditional derivatives benchmark, move across interoperable protocols and ultimately be traded by an autonomous AI system. Collateral could also be revalued, pledged, released and rehypothecated in real time, while smart contracts could automatically adjust margin, liquidate positions and redirect collateral across interconnected markets and protocols, he said.
Such systems may reduce settlement risk and improve capital efficiency, but could also accelerate procyclicality, trigger cascading liquidations and transmit risk across markets before regulators or market participants can intervene. Gunewardena said the convergence could make markets more efficient, expand access to capital and create new ways to transfer risk, while also reshaping the speed, scale and channels through which prices and risk move across products, platforms and jurisdictions.
Gaps in international regulation
Gunewardena identified four gaps across international standard-setting and bilateral regulatory work: supervisory cooperation, financial-stability oversight, global standard-setting governance and market safeguards.
On supervisory cooperation, he said many regulatory memoranda of understanding and supervisory cooperation agreements were designed for technical cooperation and information sharing rather than markets capable of transmitting risk across jurisdictions within seconds. Modern supervisory cooperation requires early notification, real-time coordination and clear responsibility before and during market stress, he said.
On financial stability, Gunewardena said the international architecture remains heavily weighted toward central banks and cash-securities regulators, while derivatives regulators and experts overseeing markets where global price discovery and risk transfer increasingly occur remain underrepresented. He argued that developments in areas including AI, tokenization, new products and derivatives have too often been examined as isolated workstreams rather than as interacting components of a changing market structure.
On global standard-setting governance, Gunewardena said leadership and representation can reflect geography, institutional convention and established relationships rather than market scale, expertise, data and responsibility for the risks being supervised. He argued that market relevance, expertise and risk should determine who leads, what gets prioritized and how standards are shaped.
The fourth gap involves market safeguards. Gunewardena said much of the existing framework was built for computer-era risks such as erroneous orders, computer glitches and algorithmic disruptions, while a future disruption could instead originate from autonomous systems functioning as designed. Such a disruption could begin in an unsupervised market trading through a weekend or overnight, when liquidity is thin and traditional markets are closed, before prices are transmitted into regulated markets when they reopen.
“Our current markets safeguards were not designed for markets that are autonomous, decentralized, and continuous,” Gunewardena said.
Challenges to the regulatory perimeter
Gunewardena said international regulation remains organized around individual institutions, products and technologies while markets are becoming integrated, continuous and increasingly autonomous. Much of the international regulatory architecture was built around identifiable products, institutions and jurisdictions, defined trading hours, distinct trading, clearing and settlement functions, and ultimately human decision-making, he said.
Markets may remain legally separated by jurisdiction, venue and product while becoming increasingly interconnected economically. Gunewardena argued that regulators should therefore understand the economic market behind a technology interface rather than focusing solely on the entity within their legal perimeter.
“The greatest regulatory risk may no longer be simply that markets move outside the regulatory perimeter,” Gunewardena said. “It may be that the regulatory perimeter itself no longer describes the market.”
Gunewardena said regulators must understand the technology, anticipate the new risk topology created by composability, interoperability and automated execution, and establish coherent standards that permit responsible innovation while protecting markets. He also said the CFTC, under Selig, is reviewing the architecture through which foreign markets and institutions access the United States and the cross-border arrangements supporting that access.
Why it matters
Gunewardena’s remarks frame tokenization, continuous trading and autonomous systems not as isolated technological developments but as interconnected changes that could alter how liquidity, collateral and risk move across products, platforms and jurisdictions. That convergence presents a challenge for regulatory frameworks built around distinct institutions, products, jurisdictions and market functions.
The remarks also place international coordination at the center of that challenge as markets become increasingly interconnected across regulatory boundaries. Gunewardena argued that international cooperation must evolve alongside those markets, warning that risk could move through the emerging architecture faster than regulatory institutions unless regulation evolves.
