CME CEO: US Perpetual Futures Approval May Bring Tax Uncertainty
2026-07-30 14:36
OdailyOdaily reports that Terry Duffy, Chairman and CEO of CME Group, stated that US approval of perpetual futures contracts could expose traders to tax and regulatory uncertainty, as the products may ultimately be classified as swaps rather than futures.
Duffy explained that the periodic exchange of funding rates between long and short positions in perpetual contracts aligns with the statutory definition of swaps under US law. The Commodity Futures Trading Commission (CFTC) currently classifies them as futures, and CME is pursuing a legal challenge against the CFTC regarding this classification.
Duffy noted that if perpetual contracts are treated as futures, some institutional traders could benefit from the mixed tax treatment under Section 1256 of the US Internal Revenue Code; if classified as swaps, they may be taxed under ordinary tax rules. The Internal Revenue Service (IRS) has yet to issue specific guidance on the tax treatment of perpetual futures.
Legal experts indicated that perpetual futures resemble swaps in structure but function economically like futures, making court interpretations of the relevant definitions crucial. Even if litigation clarifies product classification, the IRS may still need to issue separate guidance on tax treatment.
Duffy explained that the periodic exchange of funding rates between long and short positions in perpetual contracts aligns with the statutory definition of swaps under US law. The Commodity Futures Trading Commission (CFTC) currently classifies them as futures, and CME is pursuing a legal challenge against the CFTC regarding this classification.
Duffy noted that if perpetual contracts are treated as futures, some institutional traders could benefit from the mixed tax treatment under Section 1256 of the US Internal Revenue Code; if classified as swaps, they may be taxed under ordinary tax rules. The Internal Revenue Service (IRS) has yet to issue specific guidance on the tax treatment of perpetual futures.
Legal experts indicated that perpetual futures resemble swaps in structure but function economically like futures, making court interpretations of the relevant definitions crucial. Even if litigation clarifies product classification, the IRS may still need to issue separate guidance on tax treatment.
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