What Is the Tax Treatment for “Perpetual Futures” Common in Crypto Markets?

Perpetual futures are non-deliverable derivatives with no expiration date, common in crypto. For tax purposes, they are generally treated as capital assets.

Gains and losses are realized upon closing the position, and the character (short-term/long-term) is determined by the holding period. A key feature is the "funding rate," which is paid or received periodically.

The IRS has not issued specific guidance, but the funding rate is often treated as ordinary income or expense.