On August 18, 2026, the Commodity Futures Trading Commission (CFTC) proposed to restore, in modified form, an exemption from commodity pool operator (CPO) registration for certain investment advisers registered with the Securities and Exchange Commission (SEC), together with corresponding relief from commodity trading advisor (CTA) registration. SEC-registered investment advisers (RIAs) have been able to rely on similar CFTC staff no-action relief since December 2025, but the proposal would place that relief on a more durable footing and integrate it into the CFTC’s existing exemption framework. Comments on the proposal are due by October 5, 2026.
For many venture capital funds, the threshold question is straightforward: Does the fund trade commodity interests at all? A venture capital fund investing solely in conventional equity and equity-linked securities of private companies generally will not be a commodity pool on that basis. Thus, if the fund does not otherwise trade commodity interests, it generally will not need a CPO or CTA registration exemption, and the proposal should have little practical effect on it.
The proposal is more relevant for private equity, credit and hybrid funds that use derivatives for hedging or speculative purposes and for digital asset funds that trade futures, swaps, perpetuals or other derivatives.
The threshold question: Is the fund a commodity pool?
Under the Commodity Exchange Act, a commodity pool generally is a collective investment vehicle operated for the purpose of trading commodity interests. A person that operates a commodity pool and solicits, accepts or receives investor funds is a CPO, and a person that for compensation or profit advises others on commodity trading is a CTA. In a typical private fund structure, the general partner generally is the CPO because it operates the pool, and the investment adviser that provides commodity interest trading advice generally is the CTA. Both must register with the CFTC through the National Futures Association (NFA) unless an exemption applies.
Commodity interests include futures, options on futures, swaps, retail forex, and leveraged or margined retail commodity transactions. Equity and equity-linked instruments (except derivatives on broad-based indexes) are not commodity interests. Priced rounds, simple agreements for future equity (SAFEs), convertible notes, ordinary secondaries and outright spot transactions in commodities, including unleveraged spot digital assets, generally do not implicate the commodity pool rules.
Common commodity interests for private funds
- Foreign exchange hedging on non-USD portfolio investments or capital commitments.
- Interest rate hedges in connection with debt facilities.
- Digital asset strategies that extend beyond spot trading, including perpetuals, margined trades and derivatives.
- Commodity derivatives referencing energy, climate, metal and agriculture assets.
- Swaps and other derivatives referencing broad-based indexes.
There is no de minimis carve-out in the commodity pool definition itself. A single commodity interest can cause a fund to become a commodity pool. For a private fund that holds only conventional equity and equity-linked instruments in private companies, the commodity pool analysis ordinarily ends there. The remainder of this post becomes relevant when a fund trades any commodity interest.
The current exemptive framework
Many private fund sponsors whose funds are commodity pools rely on Rule 4.13(a)(3), the de minimis exemption from CPO registration.[1] In broad terms, the exemption is designed for pools whose commodity interest trading is limited. A pool can satisfy the trading limitation in either of two ways: the margin, premiums and similar amounts required to establish commodity interest positions must not exceed 5% of the pool’s liquidation value, or the aggregate net notional value of those positions must not exceed 100% of the pool’s liquidation value. Participation in the pool is limited to specified categories, including accredited investors, knowledgeable employees, qualified eligible persons (QEPs) and certain family trusts, subject to an exception for non-US investors, and the pool cannot be marketed as a vehicle for commodity interest trading.
On the CTA side, Rule 4.14(a)(8)(i)(D) provides a related exemption for qualifying investment advisers whose permitted clients include CPOs relying on Rule 4.13(a)(3), provided the commodity interest advice is solely incidental to the adviser’s securities or other investment advisory business and the adviser does not otherwise hold itself out as a CTA.
Certain CPO and CTA exemptions[2] require a notice to be filed with the NFA before an advisory agreement or subscription agreement is delivered to a prospective investor, as well as an annual affirmation within 60 days after calendar year-end. For fund sponsors that have relied on an exemption for some time, it is worth confirming that the notice remains on file and current.
The proposed RIA-QEP exemption
The CFTC adopted a QEP-based exemption in 2003 and rescinded it in 2012. After industry petitions, CFTC staff issued No-Action Letter 25-50 in December 2025, followed by No-Action Letter 26-06 in February 2026 to address certain delegation structures. The proposal would restore the exemption by rule, with modifications. The implementation of Letter 25-50 has proved cumbersome because notices under the no-action position are submitted to the CFTC by email rather than through the NFA’s electronic exemption systems. A rule also would provide greater certainty than a staff no-action position, which can be modified or withdrawn by the staff.
Proposed Rule 4.13(a)(4) would permit an RIA-CPO to claim an exemption from CPO registration with respect to a pool that meets four principal conditions:
- The CPO must be registered with the SEC as an investment adviser. State-registered advisers and exempt reporting advisers (ERAs) do not qualify.
- The pool is privately offered. Interests must be exempt from registration under the Securities Act of 1933 and not marketed to the public in the United States. The proposal expressly permits Rule 506(c) offerings, which permit general solicitation subject to specified conditions.
- Participants are limited to “eligible participants,” as discussed below.
- Form PF is filed for the pool but only if the CPO is otherwise required to file it under Form PF and related securities regulations. The proposal is drafted to accommodate the pending joint CFTC/SEC proposal that would raise Form PF filing thresholds.
Eligible participants
The participant condition is one of the proposal’s more important departures from the current no-action relief. The CFTC’s QEP concept is designed to identify investors considered sufficiently sophisticated for certain forms of CFTC relief. Some categories qualify as QEPs based on status alone, while others must also satisfy a portfolio requirement based on specified levels of investments and/or commodity interest margin or premiums.
Under the proposal, a natural person would be eligible only if the person falls within one of the Rule 4.7(a)(6)(i) QEP categories that do not require the portfolio requirement. Those categories include qualified purchasers as defined in the Investment Company Act of 1940 (generally, individuals with at least $5 million in investments), knowledgeable employees as defined in that act (generally, certain senior and investment personnel of the fund or its manager), certain principals of registered intermediaries and investment advisers, and non-US persons.
Nonnatural persons must be QEPs or accredited investors under Rule 501(a)(1)-(3), (7) or (8). Those accredited investor categories include banks, insurance companies, registered investment companies and certain other institutional investors; certain entities with more than $5 million in total assets that were not formed for the specific purpose of acquiring the securities offered; and entities whose equity owners are all accredited investors.
Letter 25-50 does not draw that distinction. It requires every participant to be a QEP under Rule 4.7(a)(6), including persons that qualify only by satisfying the portfolio requirement. The proposal, therefore, is broader for entities – because of the additional Rule 501(a) pathways – and narrower for individuals. An individual who qualifies as a QEP only by satisfying the portfolio requirement would not be an eligible participant under the proposal unless the individual also falls within one of the Rule 4.7(a)(6)(i) categories described above. The proposal also eases the Form PF condition: Letter 25-50 requires a Form PF filing with respect to each covered pool, while the proposal would require Form PF only when Form PF and related securities regulations otherwise require a filing.
As a practical matter, the participant condition generally fits a Section 3(c)(7) fund more naturally than a Section 3(c)(1) fund with individual investors. Fund sponsors relying on Letter 25-50 should compare their existing investor eligibility representations against the proposed standard.
Filing and other conditions
Claiming the exemption in the proposal would require an electronic notice filing with the NFA for each pool, an annual affirmation, a representation regarding statutory disqualifications, updates to the notice if information becomes inaccurate or incomplete, recordkeeping under Rule 4.13(c), and disclosure of the pool’s exempt status to prospective participants, typically through a legend in the offering document. The exemption is available on a pool-by-pool basis, so a manager may claim it for some funds while remaining registered as a CPO with respect to others. The proposal also expressly confirms that a sponsor relying on proposed Rule 4.13(a)(4) for one pool would be able to rely on Rule 4.13(a)(3) for another.
On the CTA side, the proposal would restore the cross-reference in Rule 4.14(a)(8)(i)(D), allowing a qualifying investment adviser to rely on the existing CTA exemption where its commodity interest trading advice is directed solely to, and for the sole use of, CPOs and other clients permitted under Rule 4.14(a)(8), including a CPO relying on proposed Rule 4.13(a)(4). The other conditions of Rule 4.14(a)(8) would continue to apply, including that the commodity interest advice be solely incidental to the adviser’s securities or other investment advisory business and that the adviser does not hold itself out as a CTA.
The proposal also would restore the reference to Rule 4.13(a)(4) in Rule 4.13(e)(2). That provision allows a registered CPO to treat qualifying pools as exempt while remaining registered with respect to other pools, subject to specified conditions. For an existing pool transitioning from registered to exempt status, those conditions generally include notice to existing participants and a right to redeem before the change. That requirement can be difficult, and potentially impractical, for closed-end funds that do not ordinarily provide for redemption rights and may hold illiquid assets. Letter 25-50 currently provides relief from that requirement. In seeking that relief, the Managed Funds Association argued that a mandatory redemption right could effectively prevent existing private funds from relying on the no-action position. The CFTC states that it does not intend to require pools already relying on Letter 25-50 to offer a new redemption right solely because a final rule supersedes the letter, and it is considering a later effective date for the conforming amendment to avoid that result. A registered CPO seeking to transition a closed-end pool that did not previously rely on Letter 25-50 generally would remain subject to the redemption requirement under the proposal.
Practical impact
The proposed exemption is likely to be most useful for SEC-registered private equity, credit and hybrid fund sponsors with meaningful derivatives programs. For these sponsors, it could eliminate the need to monitor Rule 4.13(a)(3) thresholds. As noted above, the proposed relief is unavailable to state-registered advisers or ERAs, including venture capital fund advisers relying on Section 203(l) or private fund advisers relying on Section 203(m).
Digital asset fund sponsors that use derivatives strategies may also benefit for similar reasons. Strategies involving perpetuals, margined transactions or futures can cause a pool to exceed the Rule 4.13(a)(3) thresholds, particularly where they create substantial leveraged or notional exposure. By contrast, a fund holding only unleveraged spot digital asset positions generally would not be a commodity pool on that basis and, therefore, would not need this or another CPO registration exemption.
Separate from strategy, the fund’s investor base will be important. The eligible participant condition should fit Section 3(c)(7) funds relatively naturally because their unaffiliated investors generally must be qualified purchasers, while knowledgeable employees are separately accommodated under the proposal. By contrast, some Section 3(c)(1) funds with individual investors may not qualify because accredited investor status alone is not sufficient for a natural person under the proposal.
The proposal is at 91 FR 54264 (Aug. 21, 2026), RIN 3038-AF78. We will revisit the issue when the CFTC adopts a final rule.
[1] There are other exemptions from CPO and CTA registration that are not discussed here, including exemptions applicable to certain very small pools.
[2] For example, the exemptions under Rule 4.13(a)(3), proposed Rule 4.13(a)(4) and Rule 4.14(a)(8) but not under Rule 4.14(a)(5).
The authors
Stacey Song
