Considerations on the proposed expansion of CFTC commodity pool regulation.
On July 17, 2025, the House of Representatives passed the Digital Asset Market Clarity Act of 2025 (the CLARITY Act). This pivotal legislation introduces a comprehensive regulatory framework for the digital asset sector and is now awaiting consideration in the Senate. The House passed this bill during what Republican lawmakers called “Crypto Week,” which included the landmark signing of the GENIUS Act, which aims to foster innovation and growth in the stablecoin market.
As has been widely discussed, the CLARITY Act would grant the Commodity Futures Trading Commission (CFTC) jurisdiction and regulatory authority with respect to “digital commodities,” including by establishing new registration requirements for digital commodity exchanges, brokers, and dealers. In addition, the CLARITY Act would amend the Commodity Exchange Act (CEA) to incorporate “digital commodities” into various aspects of the CFTC’s existing jurisdiction and the regulations promulgated thereunder (CFTC Rules).
One currently underappreciated consequence of these conforming amendments would be the extension of the CFTC’s regulation of “commodity pools” to activities in spot “digital commodities.” If passed, this change could have far-reaching consequences not only for investment funds transacting in spot digital assets, but also potentially for the current proliferation of digital asset treasury companies, including additional registration requirements for related operators and advisors. This is an area to watch as the CLARITY Act and other bills evolve in the Senate.
A Primer: The CFTC’s Current Regulation of Commodity Pools
Under Section 1a(10) of the CEA as it currently stands, a “commodity pool” is defined as any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in “commodity interests.” For this purpose, “commodity interests” currently include only commodity futures, options, swaps, and certain leveraged commodity and FX transactions subject to regulation by the CFTC. Notably, the definition does not encompass spot or cash market transactions.
The CEA and the CFTC Rules regulate certain activities in respect of commodity pools. In particular, a person engaged in the business of soliciting and accepting funds for the purpose of trading in “commodity interests” is subject to regulation as a “commodity pool operator.” In addition, a person who, for compensation or profit, engages in the business of advising others as to the value or advisability of trading in “commodity interests” is subject to regulation as a “commodity trading advisor.” Limited exemptions relieve certain types of firms from having to satisfy all of the registration and regulatory requirements.
Accordingly, absent an applicable exemption, a person acting as a commodity pool operator or commodity trading advisor in connection with a commodity pool is required to register with the CFTC in such capacity and is subject to a range of regulatory requirements under Part 4 of the CFTC Rules.
In addition to the CFTC Rules, commodity pool operators and commodity trading advisors must also comply with the rules of the National Futures Association (NFA), which include additional standards for conduct and operational procedures. The NFA, operating under delegated authority of the CFTC, oversees the registration and compliance of such operators and advisers, ensuring adherence to industry standards and regulatory requirements. For example, unless an exemption applies, a registered commodity pool operator or commodity trading advisor must provide investors with a “disclosure document” in compliance with the CFTC Rules that must be filed with the NFA for review prior to use. Part 4 of the CFTC Rules and the NFA rules also impose a range of ongoing reporting and record-keeping requirements on registered and certain exempt commodity pool operators and commodity trading advisors.
Putting the (Digital) Commodity in “Commodity Pool”
Section 103 of the CLARITY Act would amend the CEA to include trading in “digital commodities” as one of the forms of commodity interest activity captured by the definition of a “commodity pool.” Similar amendments would be made to include digital commodity-related activity in the definitions of a commodity pool operator and a commodity trading advisor.
This inclusion of spot or cash market transactions in digital commodities is a marked departure from the current “commodity pool” regulatory framework and definitions. As discussed above, at present spot or cash market trading in commodities — for example, gold bullion or barrels of oil — is not enough to turn a fund or other collective investment vehicle into a commodity pool. Only the trading of derivative transactions, such as commodity futures, options, swaps, and certain CFTC-regulated leveraged commodity and FX transactions, is within the scope of the definition of “commodity pool” under the current law. Notably, spot or cash market trading in digital commodities would also be a unique inclusion in the definition of “commodity pool,” given that other traditional commodities are not similarly included under the CLARITY Act.
A natural immediate question then is: How much trading in digital commodities would be required to implicate “commodity pool” status? If the CFTC’s historical interpretive approach is any guide, the answer is likely “not much at all.”
Following the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the CEA to give the CFTC jurisdiction with respect to over-the-counter swaps. Conforming references to “swaps” were also added to the CEA’s definitions of “commodity pool,” “commodity pool operator,” and “commodity trading advisor.” The CFTC staff quickly made clear that, in their interpretation, even a single swap transaction is enough to implicate “commodity pool” status — and that trading in swaps need not be the primary purpose of the relevant investment vehicle.
Accordingly, if the CLARITY Act’s amendments to the commodity pool-related definitions are adopted and the same interpretive approach is taken, even a de minimis or incidental level of spot or cash market trading in a digital commodity may be enough to trigger “commodity pool” status and the resulting regulatory implications. Any fund or collective investment vehicle that engages in spot transactions in digital commodities would thus potentially constitute a commodity pool, and the operators of and advisors to such funds would need to evaluate carefully whether they qualify for a relevant exemption or need to register with the CFTC as a commodity pool operator or commodity trading advisor.
The Treasury Company as a Commodity Pool?
Of particular note, this amendment could have significant implications for the proliferation of digital asset treasury companies. “Commodity pool” status is not strictly confined to structures like limited partnerships and trusts traditionally understood and marketed as “funds.” Rather, if the other predicates of the definition are met, a corporation, company, or any other form of legal entity may qualify as a “commodity pool.”
While Bitcoin and certain other digital assets have already been recognized as “commodities” for purposes of the CEA and CFTC Rules, an investment vehicle’s spot trading activity in Bitcoin or another digital asset that constitutes a “commodity” does not currently trigger commodity pool status. Accordingly, under the current regulatory framework, treasury companies that merely buy and hold spot BTC — without engaging in trading of derivatives such as BTC futures or options — would not constitute “commodity pools.” At present, it is only when treasury companies wish to consider delta neutral strategies or otherwise utilize derivatives as a form of hedging or for investment that they must consider the potential application of the CFTC’s commodity pool regulations.
If the amendments in the CLARITY Act are adopted, however, a treasury company holding BTC or other digital commodities may be characterized as a commodity pool even if it is not engaging in any derivatives activity. This could require the operators of and advisors to such treasury companies to register with the CFTC, prepare and file a disclosure document with the NFA, and comply with a range of related compliance obligations under Part 4 of the CFTC Rules. Further, commodity pools are subject to regulatory variation margin requirements, which may increase the price of any derivatives strategy applied by such treasury companies when transacting with swap dealers. This is because the definitions of “financial entity” and “financial end user” adopted pursuant to the Dodd-Frank Act capture commodity pools.
Importantly, the CEA and CFTC Rules do not provide a bright line exemption or exclusion from “commodity pool” status similar to the 40% asset threshold test (commonly referred to as the “balance sheet” test) found under the Investment Company Act. As a result, even if a treasury company maintains a separate operational business, this may not be enough to overcome “commodity pool” status absent further guidance or rulemaking. In fact, the definition of “commodity pool” is quite broad and has in the past been interpreted expansively by the CFTC, with only limited guidance drawing the line between an operating company and an investment vehicle that will qualify as a “commodity pool.”
The CLARITY Act does provide an exclusion for certain activities that would otherwise fall under the definition of “trading in commodity interests.” Specifically, the term “trading in commodity interests” does not include transacting in digital commodities for the purpose of acting as a digital commodity custodian; establishing, maintaining, or managing inventory or payment instruments for commercial purposes; or maintaining or supporting the operation of, or validating transactions on, a blockchain system. The last exclusion raises important questions about whether treasury companies that engage in activities such as staking might avoid being classified as commodity pools under the new framework.
What Lies Ahead?
Importantly, even if the CLARITY Act is enacted into law, it is not conclusive that a treasury company would fall within the definition of commodity pool. As discussed herein, this is a nuanced area of the law which would benefit from further legislative refinement, as well as rulemaking and guidance. Notably, the CLARITY Act delegates authority to the CFTC to promulgate rules with respect to appropriate exemptions (in addition to those outlined above) from the commodity pool regulations which may be deemed necessary or appropriate in the public interest and are consistent with customer protection principles. As a result, the CFTC would be vested with authority to determine whether or not treasury companies constitute commodity pools. The market will certainly voice its views on these important questions.
This is an area that warrants further attention and consideration — and is a topic we will continue to monitor as the CLARITY Act and other Senate bills on digital asset market structure continue to proceed through the upper chamber of Congress.
