CME CEO Warns of Overlooked Tax Risks in the U.S. Perpetual Futures Market

ME News reports that on July 30 (UTC+8), Terry Duffy, Chairman and CEO of the Chicago Mercantile Exchange (CME), told CoinDesk in an interview that there is a little-known, implicit tax risk associated with U.S. perpetual futures contracts. He noted that if perpetual futures are ultimately classified as “swaps” rather than “futures,” traders who have previously filed taxes under the treatment for futures contracts could face retroactive scrutiny from the Internal Revenue Service (IRS). This statement stems from an ongoing legal dispute between CME and the U.S. Commodity Futures Trading Commission (CFTC) over the approval of perpetual futures contracts, with both parties currently awaiting a federal court ruling. Terry Duffy argues that because perpetual futures involve periodic funding rate payments between long and short positions, they meet the statutory definition of a swap rather than a futures contract as classified by the CFTC. This classification carries significant tax implications: if classified as futures, institutional traders may qualify under Section 1256 of the U.S. tax code for a blended tax rate of 60% long-term and 40% short-term capital gains; if classified as swaps, they would be taxed at ordinary income rates. Independent legal experts note that due to the broad statutory definition of swaps and the Supreme Court’s 2024 Loper Bright ruling, which diminished judicial deference to regulatory interpretations, the ultimate outcome remains highly uncertain and could lead to prolonged litigation. (Source: Foresight News)