July 30, 2026, Chicago. CME Group CEO Terry Duffy sounded a warning about tax complications for US traders dealing with perpetual futures contracts. The core of the issue is whether these contracts are classified as futures or swaps under US law.
Perpetual futures differ from traditional futures since they don’t have expiration dates. Instead, traders exchange recurring funding payments to keep prices aligned with the underlying asset. Duffy claims these payments fit the legal definition of swaps, which could change the tax treatment drastically.
Regulated futures benefit from Section 1256 tax treatment, where 60% of gains are treated as long-term and 40% as short-term. Swaps, however, face ordinary income tax, possibly increasing liabilities for traders. The IRS hasn’t issued clear guidance on this yet.
Duffy’s remarks come amid CME’s ongoing legal challenge against the CFTC’s approval of perpetual futures in the US, shining light on an issue that has largely flown under the radar.
Legal experts remain divided. Rustin Diehl from Allegis Law notes perpetual futures structurally resemble swaps but behave economically like futures, blurring classification lines. Jason Gottlieb of Morrison Cohen points to the broad and ambiguous statutory definition of swaps.
After the Supreme Court’s 2024 Loper Bright decision, courts may now scrutinize agency interpretations more closely, potentially influencing how perpetual futures are regulated and taxed.
material is for informational purposes and not financial advice
