Your Crypto Perp Trades Could Get a Nasty Tax Surprise, CME Boss Warns
A court fight over whether crypto perpetual futures are "swaps" or "futures" could rewrite how the IRS taxes your trades, CME's CEO says.
If you trade crypto perpetual futures on a U.S. platform, a court case you’ve probably never heard of could eventually change how much tax you owe on those trades. CME Group’s CEO Terry Duffy says there’s a legal fight brewing over whether these contracts should be classed as “futures” or “swaps” — and the answer matters a lot more than it sounds.
Duffy told CoinDesk that this is “a consequence that nobody’s talking about,” warning of real “ambiguity” for American traders. The comments come as CME, the giant derivatives exchange, presses ahead with a legal challenge against the Commodity Futures Trading Commission (CFTC) over its decision to approve perpetual futures contracts for the U.S. market. Both sides are now waiting on a federal court ruling.
Why “futures” versus “swaps” actually matters to your wallet
Perpetual futures — “perps” for short — are the crypto trading world’s favorite way to bet on price moves without ever having to take delivery of the underlying asset. Unlike a normal futures contract, a perp never expires. Instead, long and short traders periodically swap “funding payments” to keep the contract’s price tracking the real market price of Bitcoin, Ether or whatever asset it’s based on.
Duffy argues that this back-and-forth exchange of funding payments is exactly what U.S. law defines as a swap. “When two parties exchange payments to each other, that is deemed a swap,” he said. The CFTC currently treats perps as futures instead — a distinction that sounds technical but has direct tax consequences.
Under Section 1256 of the U.S. tax code, futures contracts get a favorable blended tax treatment: 60% of gains or losses count as long-term, 40% as short-term. Swaps don’t get that break — they’re taxed at ordinary income rates, which can be considerably higher for active traders. Because perps are still a relatively new product, the IRS hasn’t issued specific guidance on how they should be taxed, leaving traders to make their own call.
What happens if the court sides with “swap”
Duffy raised a blunt scenario: traders who have been reporting their perp gains and losses as futures under Section 1256 could suddenly find themselves on the wrong side of the IRS if a court rules perps are really swaps. “I will be curious what the IRS has to say to you about how much they think you owe them because you didn’t file your tax returns properly,” he said.
Legal experts caution the picture isn’t so black-and-white, though. Rustin Diehl, a tax attorney at Allegis Law and professor at Weber State University, described perps as a “substance-over-form” puzzle: they’re structured like swaps on paper but trade and behave economically like futures. Jason Gottlieb, who chairs the digital assets practice at law firm Morrison Cohen, added that the legal definition of a swap is written so broadly it could arguably cover “anything,” leaving plenty of room for a judge to interpret the rules either way.
Courts, not regulators, may now call the shots
Part of what makes this case unpredictable is a 2024 Supreme Court decision — Loper Bright — that scrapped the old “Chevron deference,” which used to let federal courts defer heavily to regulators like the CFTC on ambiguous rules. Now judges have more freedom to read the statute themselves rather than simply accepting the CFTC’s classification of perps as futures.
Gottlieb expects a long legal slog: “There’s going to be a lot of litigation about it.” Diehl noted the court may first focus on whether the CFTC properly followed procedure — reviewing public comments and explaining its reasoning — before it even gets to the swap-versus-futures question itself. And even if the courts settle that debate, the IRS would still likely need to issue its own separate guidance on tax treatment, since it isn’t bound by however the CFTC or the courts define the products.
For everyday traders, the takeaway isn’t panic — it’s awareness. Nothing has changed yet, and no ruling has come down. But anyone actively trading U.S.-listed perpetual futures should keep an eye on this case and talk to a tax professional about how they’re currently reporting gains, because the ground rules could shift with little warning once the courts weigh in.
