If a Crypto Future Is Not Section 1256, What Is the Default Tax Treatment?
If a crypto future is not a Section 1256 contract (e.g. traded on an unregulated exchange), the default tax treatment is under general capital gains rules. The gain or loss is realized only upon closing the contract.
The character (short-term or long-term) depends on the holding period of the contract. Short-term gains are taxed at ordinary income rates.
