Bitcoin Perpetuals Trigger Key U.S. Tax Classification Uncertainty

U.S. tax reporting for Bitcoin perpetual contracts is emerging as a major open question after the Commodity Futures Trading Commission (CFTC) approved Kalshi's Bitcoin perpetual contract as a futures product. If the contract is treated as a regulated futures contract under Section 1256, profits are generally taxed under the 60/40 rule—60% as long-term and 40% as short-term capital gains—regardless of how long the position is held. CME, though, contends Kalshi's perpetuals function as swaps, which are explicitly excluded from Section 1256. While the CFTC's decision bolsters the case for futures treatment, it does not bind the Internal Revenue Service (IRS). The issue is expected to remain unsettled until the IRS, Congress, or the courts provide direct guidance on Bitcoin perpetuals.