How are Crypto Futures Taxed?

If you're investing in crypto futures - you might be in for a surprise tax bill. Learn about Bitcoin and crypto futures and how they're taxed in our guide.

Or if you have no clue what crypto futures are, then learn more in our crypto futures guide.

How are crypto futures taxed?

We’ll start with the obvious - crypto futures tax depends on where you live (so make sure to read our crypto tax guides for more information about where you live).

This said, generally speaking for individual investors, profits from crypto futures will be subject to Capital Gains Tax at the point you close your position. In the instance of liquidation - when your collateral is sold - this is a disposal from a tax perspective as well.

There are, however, a few quirks in the rules, particularly in the USA.

IRS crypto futures tax

In the US, there are different tax rates for short and long-term capital gains. Usually, it’s as simple as if you’ve held an asset (or position) for less than a year, you’ll pay the short-term Capital Gains Tax rate, whereas if you’ve held an asset (or position) for more than a year, you’ll pay the long-term Capital Gains Tax rate.

However, when it comes to regulated crypto futures, these have a more favorable tax treatment thanks to what’s known as the 60/40 rule. 

This rule applies to regulated futures only, but says that 60% of capital gains from futures are taxed as long-term gains and the remaining 40% are taxed as short-term gains, regardless of how long your position has been open.

Of course, many crypto futures products are not regulated, especially in the USA given the stringent rules from the CTFC and the SEC. Guidance may be subject to change at short notice. As such, if you’re trading crypto futures, we highly recommend you seek guidance from an experienced accountant to help you navigate the tax liabilities of your circumstances as this is a complex area.

You can learn more about crypto tax in the US in our US Crypto Tax Guide.

How can Koinly help with crypto futures trading taxes?

Koinly is a crypto tax tool that calculates your crypto taxes for you, meaning you don’t have to go through the hassle of doing it yourself. In particular, for investors with potentially hundreds of positions from derivatives contracts, Koinly can save you hours of identifying and calculating gains and losses, because Koinly can calculate your realized gain or loss from contracts and generate your tax report, ready to file.

Best of all, Koinly is completely free to use as a portfolio tracker - you'll only ever pay when you want to download a tax report.

If you're interested in exploring other tools for crypto futures trading, we've put together a guide to the best crypto futures trading platforms.