Are Bitcoin Perpetuals Valid Futures Contracts for Tax Reporting?

The Commodity Futures Trading Commission’s approval of Kalshi’s Bitcoin perpetual contract as futures has created an immediate federal tax classification question. If BTCPERP — a perpetual Bitcoin contract that maintains continuous Bitcoin price exposure without a fixed expiration date — qualifies as a regulated futures contract under Internal Revenue Code §1256, individual traders generally receive annual mark-to-market treatment and the familiar 60% long-term and 40% short-term capital gain allocation regardless of holding period. If the instrument is instead treated as a swap, §1256 expressly excludes commodity swaps and similar agreements, and the taxpayer may instead confront the notional principal contract rules of Treas. Reg. §1.446-3. Neither regime is a clean fit for a Bitcoin perpetual futures contract.

The Chicago Mercantile Exchange’s pending lawsuit challenging the CFTC’s approval of Kalshi’s Bitcoin event contract exposes that tax problem but probably won’t resolve it. CME argues that Kalshi’s Bitcoin perpetual contracts are swaps rather than futures under §1a(47) of the Commodity Exchange Act. Chicago Mercantile Exchange Inc. v. Commodity Futures Trading Commission, No. 1:26-cv-01763 (D.D.C. June 18, 2026). The CFTC moved to dismiss the lawsuit on Sept. 2, arguing, among other things, that CME lacks standing because it has not plausibly alleged a competitive injury from Kalshi’s listing. (CFTC, Motion to Dismiss, Sept. 2, 2026).Even if a court agrees, that decision itself wouldn’t retroactively amend taxpayers’ returns. It could, however, materially strengthen an IRS challenge to §1256 treatment. Conversely, the CFTC’s approval of BTCPERP as a future provides meaningful support for a taxpayer’s reporting position, but it doesn’t bind the IRS. Until the IRS, Congress, or a tax court addresses perpetuals directly, practitioners should evaluate §1256 qualification independently, document the authority supporting the chosen return position, and consider disclosure and penalty protection where appropriate.