What Is the Tax Treatment for a Crypto Futures Contract That Is NOT a Section 1256 Contract?

A crypto futures contract not qualifying under Section 1256 (e.g. one traded on an unregulated exchange) is typically treated as a standard capital asset. Gains and losses are recognized only upon closing the position.

The tax character is determined by the holding period: short-term if held for one year or less, and long-term if held for more than one year. This means the 60/40 rule and mark-to-market do not apply.