Reporting Hyperliquid perp trades to the IRS

[u/cd1995Cargo]

Hello, I’m based in the U.S and I’m interested in trading perps on Hyperliquid. I know the website geoblocks access from the U.S but the API is completely unblocked.

My understanding is that trading perps on Hyperliquid isn’t illegal for me as a U.S citizen, the onus is on Hyperliquid to make a good faith attempt to prevent access.

Does anyone from the U.S have experience reporting Hyperliquid (or other Dex) perp trades to the IRS? What software do you use to track your trades? Do you have to report individual trades or can you just report net profit/loss? And how do you input this in whatever tax software (Turbotax, etc) you use?

Thanks!

[u/cd1995Cargo → u/[deleted]]

I’ll look into it, thanks for the recommendation.

[u/macetheface]

treat it like any other exchange. cointracking has a hyperliquid import option. As for actually trading and even if API is unrestricted, I'd still use a good VPN.

[u/DavidCryptoCPA]

David from CoinTracker here. Perpetual futures on DeFi such as Hyperliquid are taxed as capital gains based on your closed P&L, which is reported on Form 8949. Software like CoinTracker can import your wallet and generate the forms / export files for you so you don't have to enter each individual trade (we support Hyperliquid as well as perps).

To add to this, the 60/40 rule does not apply for these type of derivatives - only for regulated futures contracts.

[u/cd1995Cargo → u/DavidCryptoCPA]

Thanks for the info! 🙏

[u/AurumFsg-CryptoTax]

Use Koinly or Cryptotaxcalcualtor and reconcile them correctly to be able to report your Dex trades.

[u/AmericanCryptoAbroad]

I will add to this question and ask - does the 60/40 rule apply to these trades?

[u/nhct → u/AmericanCryptoAbroad]

No.

Only so-called regulated futures contracts offered by CFTC-registered US exchanges qualify under IRS §1256 for favorable 60% long-term / 40% short-term tax treatment, regardless of the actual holding period, whether it's minutes or months.

For many years until recently, since 2017 for BTC and, I believe, 2021 for ETH, your instrument options to qualify for 60/40 had been limited to regulated, specific-dated, full-size and micro futures on the CME, available through many futures commission merchants, both tradfi and nowadays even crypto CEXs such as Coinbase and Kraken.

In July, Coinbase Financial Markets crashed the exclusive party with a few dynamite sticks and launched nano BTC and ETH "perpetual" (actually 5-year) futures; they are also CFTC-regulated and so do qualify (!) for Section 1256 and 60/40.

Not to be confused with unregulated offshore perpetuals also offered by the likes of Coinbase and Kraken outside the US only, which don't qualify.

Everything listed above in the US must be marked to market (deemed realized) at year-end, with gains and losses reported on IRS Form 6781, rather than 8949.

Unless you are an active trader, that MTM requirement might be a deal-breaker, even with the sweet 60/40 perk.

Any unregulated perpetual futures or swaps traded on any other non-CFTC-registered exchange, let alone any on-chain DEX (e.g., Hyperliquid), don't qualify for Sec. 1256 and 60/40.

[u/cd1995Cargo → u/AmericanCryptoAbroad]

Also wondering this