Crypto Options & Futures Taxes in the US 2026 – Derivatives Tax Guide

Crypto derivatives – options and futures – have unique US tax rules that can be more favorable than spot trading. Here is how to use the rules correctly.

Section 1256 Contracts: The 60/40 Rule

Regulated futures contracts on designated exchanges qualify as Section 1256 contracts. The key benefit: 60% of gains are treated as long-term and 40% as short-term – regardless of how long you held the position.

This means even day traders get the 60/40 split, accessing long-term capital gains rates on more than half their profits.

Also: Section 1256 contracts are marked-to-market at year-end (gains/losses recognized even if position is open).

Which Crypto Futures Qualify for Section 1256?

• CME Bitcoin Futures (BTC): Qualify as Section 1256 contracts
• CME Ethereum Futures (ETH): Qualify as Section 1256 contracts
• Offshore exchange perpetuals (Binance, Bybit): Do NOT qualify – treated as regular property
• Crypto options on regulated exchanges: May qualify – consult a tax professional

Crypto Options (Deribit, Coinbase)

Options on crypto not traded on US regulated exchanges are treated as standard property:

• Buying a call/put: cost of premium is your cost basis; taxed when exercised or expired
• Writing (selling) options: premium received is income when recognized
• Exercise: treated as buying/selling the underlying crypto at the strike price
• Expiry worthless: full loss of premium as capital loss

Perpetual Swaps (Offshore Exchanges)

Perpetual swap contracts on Binance, Bybit, OKX, etc. are not Section 1256 contracts. Each settlement, funding payment, and close is a separate taxable event. Funding payments (positive or negative) are ordinary income/expense.

Form 6781: Section 1256 Reporting

Report Section 1256 gains and losses on Form 6781. The form automatically applies the 60/40 split. Net gains transfer to Schedule D with the appropriate short/long-term breakdown.

Loss Carryback for Section 1256

Section 1256 net losses can be carried back 3 years and applied against prior Section 1256 gains – a unique benefit not available for regular capital losses.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.