Tax Experts Reviewed Rules for Digital Asset Contracts
Panelists debated the federal and state tax treatment of event and perpetual contracts amid evolving regulatory landscape.
Updated on Oct. 12, 2026 in Taxes
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Tax professionals met at an American Bar Association event to discuss the complex tax treatment of digital asset event contracts and perpetual contracts. Current federal guidelines remain unsettled, prompting a broader look at how these financial instruments are handled under existing tax law.
Why it matters
The ambiguity surrounding how to tax these contracts creates uncertainty for market participants and regulators alike. As states move to implement their own frameworks, establishing clear federal tax rules is essential for consistent enforcement.
Current regulations allow 90% of gambling losses to be deducted against winnings. Meanwhile, Illinois has set a 0.2% privilege tax on the gross U.S. dollar value of digital asset transactions.
The players
American Bar Association
This professional organization hosted the meeting where experts addressed the tax treatment of various digital asset financial products.
Commodity Futures Trading Commission
This federal agency is responsible for the regulation of event contracts, which it currently categorizes as swaps.
The details
Perpetual contracts utilize a funding rate to track a reference asset price without a maturity date, while the Commodity Futures Trading Commission classifies event contracts as swaps. State-level policies vary significantly, with Kentucky and North Carolina taxing operator fees while Illinois enforces a transaction tax through strictly liable brokers.
Timeline
October 6, 2026: Tax professionals discussed digital asset taxation at an industry meeting.
January 2027: The original scheduled effective date for the Illinois digital asset tax.
July 2027: The revised effective date for the implementation of the Illinois digital asset tax.
Market Dynamics
The ongoing litigation surrounding the Illinois Digital Asset Tax Act reflects a broader struggle between state-level taxation efforts and federal oversight. This tension mirrors historical cycles where emerging financial products force regulators to reconcile new revenue models with existing tax codes.
Taxpayers involved in prediction markets or digital asset trading should prepare for varied reporting requirements as state laws diverge. Investors must account for potential tax liabilities on earned fees in states like Kentucky and North Carolina while tracking Illinois' delayed implementation schedule.
The takeaway
Taxpayers should carefully document their transactions and losses, as the regulatory environment for digital assets is currently in flux. Keeping accurate records will be critical for compliance as federal and state authorities finalize their respective reporting requirements.
What happens next
The state of Illinois is set to implement its 0.2% privilege tax on digital asset transactions beginning in July 2027.
Further reading
Learn more about the evolving landscape of Taxes in the United States.
Source note: This article includes information reported by Thomson Reuters.
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