How Does the Tax Treatment of a Cash-Settled Bitcoin Future Differ from a Spot Bitcoin Sale?

A cash-settled Bitcoin future is typically treated as a Section 1256 contract, meaning it benefits from the 60/40 capital gains split and mark-to-market accounting. A spot Bitcoin sale is generally treated as a capital asset, subject to standard short-term or long-term capital gains based on the holding period.

The future's tax treatment is often more favorable due to the 60/40 rule.