Perpetual Futures Taxes: What US Traders Actually Face

Perpetual futures are the most-traded derivative in crypto and one of the least-documented in US tax. A perp has no expiry, tracks a spot index through a funding payment exchanged between longs and shorts, and settles in cash. None of those three features map cleanly onto a tax code written for dated, deliverable, exchange-listed contracts.

So here is the honest position, up front. There is no IRS ruling, regulation, notice, revenue procedure or published decision that addresses perpetual futures. Anyone telling you perps are “60/40”, or “just crypto”, or “the same as CME futures” is giving you a conclusion the authorities do not supply. What the authorities do supply is a framework, and the framework is specific enough to be useful — including about which answer is probably wrong for your venue.

Is a perpetual future a Section 1256 contract?

For most venues US retail traders actually use, probably not — and there are two independent reasons, either of which would be enough on its own. The first is about the venue and is close to mechanical. The second is about how the contract itself is legally characterised, and that part is genuinely open.

Ground one: the qualified board or exchange test

A regulated futures contract under §1256(g)(1) has to clear two requirements: it must be traded on, or subject to the rules of, a qualified board or exchange, and the amount required to be deposited and the amount that may be withdrawn must depend on a system of marking to market.

The mark-to-market prong is usually the easier one for a perp to satisfy: continuous margining against a mark price is that kind of system. The venue prong is where most perps run into trouble. A qualified board or exchange under §1256(g)(7) is, broadly, a national securities exchange registered with the SEC, a domestic board of trade designated as a contract market by the CFTC, or another market Treasury has specifically determined has adequate rules. A venue that holds none of those designations does not meet the description — and an on-chain protocol typically has no registrant that could hold one in the first place.

So for perps on the offshore and on-chain venues listed below, §1256 is generally not reachable on the venue prong alone, and the live question becomes capital versus ordinary rather than 60/40 versus short-term. This is the most stable conclusion on the page, because it turns on designations that are a matter of public record rather than on how anyone characterises the contract. It is still an application of the definition to a venue, not a ruling about perps.

Ground two: the swap exclusion — and this one reaches even a US-listed perp

This is the part almost nobody publishes, and it is the more interesting half.

This is not a theoretical worry invented for this page. It was raised publicly in 2026 by the chief executive of CME Group as an unresolved tax risk hanging over US-listed perpetual futures, reported at the time, and it has been worked through in the practitioner literature — see Bloomberg Tax, “Are Bitcoin Perpetuals Valid Futures Contracts for Tax Reporting?”.

There is a useful precedent for how the Treasury thinks about this shape of question: when it proposed rules on the swap exclusion, it took the position that options over notional principal contracts are excluded from §1256 even when listed and even when they would otherwise be nonequity options. That is the same instinct applied to a near neighbour of the perp.

And the proposed rules make one structural point that matters more than the specific example: in Treasury’s own framing, a contract can trade as a futures contract and still meet the definition of a notional principal contract — the two categories are not mutually exclusive, and where a contract falls into the NPC definition the swap exclusion can take it out of §1256 anyway.

That is the thing to take from it: “it trades like a future on a futures exchange” is not by itself an answer to the §1256 question. It does not tell you a perp is an NPC — nothing published does — but it removes the easiest reason to assume the swap exclusion cannot reach a listed, exchange-traded product.

What this means practically. A trader on a CFTC-designated venue has a colourable §1256 argument that a trader on an undesignated venue does not. Colourable is not settled, and the swap exclusion is a real counter-argument rather than a technicality. Treating a perp as 60/40 is a return position that needs its authority written down and a conversation about disclosure — not a default, and not something to rule out from a web page either.

What the underlying does to the analysis — and why “a perp is a perp” is wrong

Almost every discussion of perp taxation treats the product as one thing. It is not. §1256(b)(2)(B) does not exclude “swaps” in the abstract — it names commodity swaps, equity swaps, credit default swaps and similar agreements. The named categories matter, because the strength of the swap argument changes with what the contract references. Venues now list perps on things that are not crypto at all, and that is where the analysis moves.

Venue structure: a bilateral contract is not an exchange-traded one

The venue table below sorts on whether a market holds a §1256(g)(7) designation. There is a second structural distinction underneath it that matters just as much, and it separates two kinds of venue that get lumped together as “DEX”.

• Order-book and pool-backed venues — Hyperliquid, GMX, dYdX, Drift, Jupiter. You submit into a shared market. There is something exchange-like in the picture; it simply holds no designation. The §1256 failure is about registration status.
• Bilateral / RFQ venues — Variational's Omni is the clearest example, where each position reportedly sits in its own settlement contract between the trader and a single liquidity-provider vault, with margin, funding and liquidation terms written into that contract. Here the §1256 failure is more fundamental: there is no exchange in the picture at all, designated or otherwise. A privately negotiated contract between two identified parties, paying periodic amounts, with no exchange listing, is close to the paradigm of what the swap exclusion was written about.

Why this is worth knowing rather than academic. On an order-book DEX the §1256 argument is weak because of a registration fact that could in principle change — a venue could seek designation. On a bilateral RFQ venue the argument is weak because of what the instrument is, which no amount of registration fixes. Those are different kinds of “no”, and only the second one is stable. Neither is a reason to assume gambling treatment or to assume capital treatment; both are reasons the 60/40 answer people hope for is not available.

Where that leaves the four plausible treatments

Treatment	How you get there	Where it is plausible
§1256, 60/40	Perp is a regulated futures contract and not a “similar agreement” under the swap exclusion	Realistically only arguable on a CFTC-designated contract market, and contested even there. Generally not reachable on an undesignated offshore or on-chain venue, which fails the venue prong before the exclusion is reached.
Capital gain / loss on close	The position is property; closing it is a disposition. Short-term unless held over a year, which perps rarely are.	The common practitioner default for offshore and DeFi perps.
Notional principal contract / swap	Periodic payments against a notional amount — the contract is characterised as a swap and taxed on its own rules	Arguable on the economics; drives the §1256 exclusion above whether or not it ends up governing the whole contract.
Ordinary income	One candidate for the funding leg, and the result for the whole position for a trader who has validly elected §475	See the funding section next — this is where much of the practical exposure sits.

Note what sits at the edge of that table: wagering. §165(d) turns on whether a transaction is a wager, and a perp is a poor fit for that description — a continuous payoff tied to a price index, a position you can size, add to and exit at will, no fixed stake and no binary outcome.

That is a materially weaker fit than a binary event contract, which is why the gambling question that dominates prediction markets is much less pressing for perps. We would not go further and say it could never be raised on any fact pattern — an unusual product, or a very short-dated binary-like one, is a different conversation — but for a standard perpetual it is not where the risk lives.

Funding payments: three treatments, and an asymmetry that can tax you on a loss

Funding is the mechanism that makes a perp track spot, and it is the single most mishandled item on a perp tax return. Depending on your side and the rate, you pay it or you receive it, often many times a day.

At least three treatments are in use, and no guidance picks one. None of them is the default; which is defensible depends on how the contract is characterised and on the taxpayer's own facts:

1. Ordinary income or expense at each settlement. Each funding payment is its own event. Often described as the most conservative, the most record-intensive, and the one that can produce income in a year when the position is still open.
2. An adjustment to basis or to the amount realised. Funding folds into the position's result and is recognised when the position closes.
3. Deferred and recognised at close. Economically similar to (2), reached by a different route.

Which treatment is defensible for you depends on facts a page cannot see. What is not fact-dependent is the recordkeeping: you cannot choose between these three after the fact without a complete funding history, timestamped and priced. Export it while you still can — the choice stays open only as long as the data does.

Venue matters more than product — what we can and cannot verify

The venue prong is the part of the §1256 question that can be answered from public record, so the venue list is the practical starting point. What the table resolves is the venue prong only — it does not tell you how any contract is legally characterised, and a venue that clears the prong can still meet the swap exclusion. We separate what is publicly verifiable from what is not, and we do not assert the rest.

What that table does and does not claim. The “No” entries rest on a checkable fact: as far as we can establish, these venues hold no CFTC contract-market designation and no SEC exchange registration, and an on-chain protocol typically has no registrant that could hold one. Designations do change, so that is a statement about the present rather than a permanent one. What we are not asserting, for any venue on the list, is the legal form of its contract, which entity is your counterparty, which jurisdiction its terms select, or what it reports to anyone. Those are platform facts that change without notice, and where we have not confirmed them we say not publicly verified rather than filling the gap.

Points, rebates and staking credits: the question nobody has answered

Almost every venue in the table above runs some incentive programme — trading points, referral rebates, fee discounts, maker credits, or a staking programme that pays a share of protocol revenue. Aster is reported to have moved from trading points to staking during 2026, and others have shifted in the opposite direction. These programmes are the normal case on a perp DEX, not an edge case, and they are where the hardest recordkeeping sits.

What is reasonably clear: when a programme ends in a token actually landing in your wallet, the airdrop framing applies — tokens received are generally income at fair market value when you have dominion and control, and that amount becomes basis for a later sale. That part has real authority behind it, and the common and costly error is omitting the income step because no form arrived, then selling against a zero basis.

What is genuinely unresolved is everything before that moment, and we have not found a source that settles any of it:

• Points with no token yet. A balance that is not transferable, not redeemable and may convert at an undetermined ratio — or never convert at all — is hard to characterise as received income. But no authority says a points balance is nothing, either.
• Fee rebates and discounts. A rebate on a fee you paid looks more like a price adjustment than income; a credit paid for volume you generated looks more like a payment. The same programme can be described either way depending on the mechanics.
• Staking credits that accrue continuously. A share of protocol fees accruing by the second raises a timing question the airdrop framing does not reach, because there is no single moment of receipt to point at.

What we are not going to do is pick an answer. No IRS guidance addresses points programmes on derivatives venues, and a confident single rule would be a conclusion the authorities have not supplied. What is practical in the meantime is a record: for every point balance, rebate and credit, keep the date, the mechanics, the stated conversion terms, and the value at any moment you could actually dispose of it. That is the evidence a position gets built from later, and it cannot be reconstructed after the fact.

Nobody is sending you a form — and that got more true, not less

There is a widespread assumption that the Form 1099-DA regime swept DeFi into broker reporting. It did not. The regulations that would have imposed broker reporting on decentralised front ends were repealed in April 2025 by a Congressional Review Act resolution. So an on-chain perp venue is generally not issuing you a 1099-B, a 1099-DA or a 1099-MISC, and is under no current obligation to.

What follows from that is simple and unforgiving: your records are the only record. There is no form arriving in February to reconcile against, no cost-basis column computed for you, and no third party that can reconstruct your funding history if the venue changes its export or stops serving your jurisdiction. And note the thing people get backwards — the absence of a form changes your evidence, not your liability. The income is reportable either way.

What to preserve, per position

• Every fill — timestamp, side, size, price, and the fee, separately from the price.
• The complete funding history — each payment, its timestamp, its sign, and its USD value at the time. This is the item most often lost, and it is the one that decides which of the three funding treatments you can even support.
• Collateral movements — deposits, withdrawals, and what asset they were in. If you posted a token as margin, its own disposition is a separate taxable question from the perp.
• USD value at each event, not just the token amount. A perp settled in a stablecoin still needs a dollar figure, and a perp collateralised in a volatile token needs one at every movement.
• Liquidations — what was closed, at what price, and what was taken as a fee or penalty.
• Export on a schedule, not at filing. Exports are commonly row-capped and histories are commonly windowed; the data you need in April is the data you pulled in October.

If you have elected §475, the picture changes

A trader who qualifies for trader tax status and has made a §475 mark-to-market election is on different ground: positions are marked at year end and gain or loss is ordinary, which removes the $3,000 capital-loss cap and the wash-sale bookkeeping. For a perp book that is often the more coherent answer, because the capital-versus-ordinary fight becomes moot for the elected class.

But two cautions specific to this product. First, §475(f) is two separate elections — (f)(1) for securities and (f)(2) for commodities — and which one, if either, reaches a perp depends on characterising the contract first. That is the same unresolved question, arriving from the other direction. Second, the election deadline is unforgiving and widely misreported: it runs to the unextended due date of the prior year's return, and filing an extension does not extend it. The mechanics, the new-taxpayer window and the revocation rules are on the mark-to-market election page.

What we are not asserting

The venue table above rests on designations that are a matter of public record. Almost nothing else on this page does, and it is worth being explicit about the difference.

We did not open the statute, the regulations or any IRS material from the environment this page was researched in — outbound access to those sources is blocked here. Section numbers and the structure of the provisions are consistently identified across independent professional sources, which is why we are willing to name them; but no statutory or regulatory wording on this page is quoted as though we had read it, and where the exact words would have to carry the argument we describe the provision's effect instead.

On the products and the venues, we are specifically not asserting: the legal characterisation of any perpetual contract; which entity is your counterparty on any venue; which jurisdiction any venue's terms select; whether any venue currently holds, or has applied for, a designation; what any venue reports to any authority; or that any fee, funding formula or export limit described anywhere on this site is current. Those are platform facts, several of them governable by vote, and they change without notice. Where we have not confirmed something we say “not publicly verified” rather than filling the gap.

What we are confident about is narrower and more useful than a rate: what the requirements are, which of them a venue plainly does not meet, which question decides the rest, and what records keep your options open.

What would change this page

We would rather tell you what we are watching than pretend the question is closed. Any of these would move the analysis:

• IRS guidance on perpetuals — a notice, ruling or regulation addressing whether a perp is a regulated futures contract, a notional principal contract, or a “similar agreement” inside §1256(b)(2)(B).
• Finalised or amended swap-exclusion regulations touching contracts with periodic payments on a designated market.
• A US-listed perpetual future reaching real retail volume, which would force the swap-exclusion question into practice rather than commentary.
• Legislation on digital-asset derivatives, which has been drafted repeatedly without passing.
• A court decision on any of the above — there is currently none.

Until one of those lands, the useful posture is not a confident rate. It is a documented position, complete records, and a professional who will put their name on the return. Our guides to futures taxes, crypto taxes and prediction-market taxes cover the neighbouring products. Three venues have enough of their own story to be worth a page: Hyperliquid (HLP vault, HYPE airdrop and staking), GMX (escrowed rewards, per-second fee accrual, and an LP position that makes you the traders’ counterparty), and dYdX (a front end that excludes US persons, and Cosmos-style unbonding meeting the staking rules). The other venues in the table above do not have one. Their §1256 answer is identical for the same structural reason, and their token-distribution questions are the ordinary airdrop and staking questions covered here and on crypto taxes — so a page each would repeat this one with the name changed.

Frequently Asked Questions

Are perpetual futures Section 1256 contracts?

Probably not, for most venues US retail traders use, and for two separate reasons. A regulated futures contract under §1256(g)(1) must be traded on, or subject to the rules of, a qualified board or exchange — broadly an SEC-registered national securities exchange, a CFTC-designated contract market, or a market Treasury has specifically approved. A venue holding none of those designations does not meet that description, which is the more mechanical of the two reasons.

Separately, §1256(b)(2)(B) excludes swaps and similar agreements even on a qualified exchange, and the funding mechanism is what makes that argument available — but whether a particular perp is characterised as a swap, a future, a notional principal contract or something else is an open legal question that no IRS guidance resolves. The venue point is close to checkable; the characterisation point is not.

What tax rate applies to crypto perpetual futures?

There is no established rate, and any source quoting a single one is supplying a conclusion the authorities do not. For offshore and on-chain perps a common practitioner approach is capital gain or loss on closing the position, short-term in practice because perps are rarely held over a year — but that is a default people use, not a rule. Funding payments are handled separately and inconsistently. A trader who has validly elected §475 is on ordinary treatment instead. Which applies to you depends on the venue, how the contract is characterised, your activity level and whether you have elected.

How are perpetual funding payments taxed?

No guidance addresses this, and at least three treatments are in use: ordinary income or expense at each settlement, an adjustment to basis or amount realised, or deferral until the position closes. None is the default.

The combination to model is the potential asymmetry: if funding received is treated as ordinary income, and if you are an investor rather than someone carrying on a trade or business, funding paid may not be deductible, because it starts to look like an investment expense and those are miscellaneous itemized deductions, which OBBBA made permanently suspended. On that combination you could see income on funding received, no deduction for funding paid, and a capital loss on the position capped at $3,000. None of those steps is settled by guidance, and a different treatment or trade-or-business status changes the result.

Does Hyperliquid or dYdX send a 1099?

Generally no. These are non-custodial on-chain venues that do not act as brokers, and the regulations that would have imposed broker reporting on decentralised front ends were repealed in April 2025 by a Congressional Review Act resolution. So there is usually no 1099-B, 1099-DA or 1099-MISC. The absence of a form changes your evidence, not your liability — the income is reportable either way, and your own exported records are the only record that exists.

Can I use the 60/40 rule on Binance or Bybit perps?

Very likely not. The 60/40 split comes from §1256, which requires a qualified board or exchange. As far as we can establish, offshore centralised exchanges are not SEC-registered national securities exchanges, are not CFTC-designated contract markets, and hold no Treasury determination — so the venue requirement is not met, and the swap exclusion never even needs to be reached. Designations can change, so this is a statement about the present. On the current position, reporting offshore perp gains as 60/40 would be a difficult stance to support.

Are perpetual futures gambling for tax purposes?

It is a much weaker fit than for binary event contracts, which is where the §165(d) wagering analysis genuinely bites. §165(d) turns on a transaction being a wager, and a standard perpetual looks unlike one: a continuous payoff tied to a price index, no fixed stake, no binary outcome, and a position you can size, add to and exit at will.

So this is a long way down the list of perp tax risks. We would not go further and say the question could never be raised on any fact pattern — an unusual or binary-like product is a different conversation — but for a standard perp it is not where the exposure sits.

What records do I need for perpetual futures?

Every fill with timestamp, side, size, price and fee; the complete funding history with each payment's timestamp, sign and USD value; all collateral movements and the asset they were in; the USD value at each event rather than just token amounts; and liquidation details. Export on a schedule rather than at filing — exports are commonly row-capped and histories windowed, and the funding history is both the item most often lost and the one that decides which funding treatment you can support.

Should I make a §475 election for a perp book?

It is worth modelling, because ordinary treatment removes the $3,000 capital-loss cap and makes the capital-versus-ordinary question moot for whatever class is validly elected. Two cautions specific to perps. §475(f) is two separate elections — (f)(1) for securities and (f)(2) for commodities — and deciding which one could even reach a perp requires characterising the contract first, which is the same unresolved question arriving from the other side; an election cannot cover a class the product does not fall into. And the election statement is due by the unextended due date of the prior year's return, which filing an extension does not move.

Tax treatment depends on the specific instrument, activity, entity and taxpayer circumstances. TraderTax provides general educational information; your treatment may differ. Nothing here is advice on your return.