CME Group CEO Terry Duffy says U.S. regulators approved perpetual futures without resolving how the IRS will tax them. The fight turns on whether perps count as futures or swaps, a distinction that decides whether traders get a blended capital-gains rate or ordinary income treatment. CME is already suing the CFTC over its approval of the products, and a federal court decision is still pending.
According to CoinDesk: "There's a consequence that nobody's talking about", Duffy said, arguing regulators approved perpetual futures without settling how the IRS will ultimately tax the contracts. CME continues its legal challenge against the CFTC over its approval of the products, and both sides are still awaiting a federal court decision.
Classification decides the tax rate
Perpetual futures never expire; traders instead exchange periodic funding payments meant to keep the contract's price close to the underlying asset. Traditional futures fall under Section 1256 of the tax code, which treats 60% of gains as long-term and 40% as short-term capital gains, while swaps are taxed as ordinary income.
Duffy argues the funding-payment exchange between long and short positions meets the legal definition of a swap, not a future. If regulators or courts agree, traders who filed returns treating the contracts as futures could face IRS questions over what they owe.
CME sues over Kalshi's Bitcoin perps approval
CME sued the CFTC in June 2026 over its approval of Kalshi's Bitcoin perpetual futures contract, which Kalshi received in May 2026 as the first U.S. exchange to offer CFTC-regulated Bitcoin perps. Duffy said 94% of CME's trading volume comes from institutional clients, who he said have shown no demand for perpetual futures while the tax treatment stays unresolved.
Legal experts expect a long court fight
Tax attorney Rustin Diehl called it a substance-over-form question: perpetual futures look like a swap in structure but function like futures in practice. Jason Gottlieb of Morrison Cohen said the statutory definition of swaps is broad enough to cover the products either way.
However, the Supreme Court's 2024 Loper Bright decision ended judicial deference to agency interpretations, so courts rather than the CFTC may end up deciding the classification. Diehl said a judge is likely to first examine whether the CFTC followed proper procedure before approving the contracts, rather than ruling on the swap-or-futures question directly. Even a court ruling might not settle the matter, since the IRS is not obligated to follow the CFTC's interpretation and could still issue separate guidance.
Sources: CoinDesk, Crypto Briefing
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