There is a hidden tax risk of crypto perps that no one is talking about, says CME's CEO
U.S. approval of perpetual futures could create tax and regulatory uncertainty if courts or regulators later deem them swaps instead of futures. CME’s Terry Duffy argues perps should be treated as swaps because their funding payments resemble periodic exchanges of value, while the CFTC has approved them as futures. The classification matters for taxes: futures may qualify for Section 1256’s 60/40 capital-gains treatment, but swaps are generally taxed as ordinary income, and the IRS has issued no specific guidance on perps. Legal experts say the issue is unsettled because perps have futures-like economics but swap-like structure, and the broad swap definition leaves room for interpretation. Post-Loper Bright, courts may rely less on agency views and more on statutory text, likely first reviewing whether the CFTC properly handled the approval process. Even if the court settles the CFTC question, IRS guidance may still be needed for tax reporting.
