For years, crypto investors and tax professionals operated in a regulatory no-man's land. Bitcoin might be a commodity. Ethereum might be a security. Altcoins were anyone's guess. That ambiguity ended on March 11, 2026, when the Securities and Exchange Commission and the Commodity Futures Trading Commission signed a formal Memorandum of Understanding establishing a dual-track classification system for digital assets.

The implications for tax reporting are real, even if the core tax rules have not changed yet.

What the MOU Actually Says

The MOU does not create new law — it formalizes a jurisdictional division between the two agencies that has been developing since the Digital Asset Market Structure Act discussions of 2024 and 2025. The core framework works as follows:

CFTC jurisdiction — commodity-nature assets: Bitcoin, Ether, and any digital asset that the joint review panel determines passes the "commodity nature" standard will fall under CFTC oversight. These assets are treated as commodities in regulated derivatives markets, and the CFTC has primary authority over spot market enforcement for commodity digital assets.

SEC jurisdiction — everything else: Any digital asset that has not been affirmatively classified as a commodity-nature asset defaults to SEC jurisdiction and is treated as a security under the Howey Test analysis. This captures the vast majority of altcoins, governance tokens, and most DeFi protocol tokens.

A joint Digital Asset Classification Panel — staffed with representatives from both agencies — will maintain a public registry of classified assets. Updates to the registry are expected quarterly.

Why This Matters for Your Taxes

Here is the critical point that every crypto investor needs to understand: the MOU does not change how the IRS taxes crypto. Under Revenue Ruling 2023-14 and the foundational guidance of Notice 2014-21, all cryptocurrency — commodity or security — is still treated as property for federal income tax purposes.

This means:

Capital gains and losses apply to dispositions of all crypto assets.
Short-term gains (assets held under one year) are taxed at ordinary income rates.
Long-term gains (assets held over one year) qualify for preferential capital gains rates.
The cost-basis methods available to you — FIFO, Specific Identification, and others — remain the same regardless of whether an asset is CFTC- or SEC-classified.

The classification matters today primarily for regulatory compliance, not tax computation.

CFTC Assets: BTC, ETH, and Commodity Treatment

For assets in the CFTC column — currently Bitcoin and Ether, with Litecoin, Bitcoin Cash, and several others under review — the tax treatment continues exactly as it has since 2014. These assets are property. You report gains and losses on Form 8949. You track your cost basis per lot.

One area where commodity classification could eventually matter is the application of Section 1256 contracts to regulated crypto futures. Section 1256 assets use a 60/40 rule (60% long-term, 40% short-term regardless of holding period), which can be favorable. If Congress extends Section 1256 treatment to spot Bitcoin and Ether positions — a proposal circulating in the House — commodity classification would become directly material to tax planning.

SEC Assets: Securities Treatment and Wash Sale Risk

For assets under SEC jurisdiction, the more consequential future risk is the wash sale rule. Currently, the wash sale rule (IRC Section 1091) does not apply to crypto. Investors can sell at a loss and immediately repurchase the same asset — a strategy that generates tax losses while maintaining market exposure.

Several legislative proposals would extend wash sale rules to SEC-classified digital assets. If passed, investors holding SEC-classified tokens could no longer harvest losses freely. CFTC-classified assets may remain outside wash sale rules, creating a meaningful planning divide between the two categories.

Until legislation passes, wash sale rules do not apply to any crypto. But the classification framework is laying the groundwork.

The Howey Test: How Assets Get Classified

The SEC's primary tool for identifying securities is the Howey Test, derived from a 1946 Supreme Court case. An asset is a security if it involves: (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profits, (4) from the efforts of others.

Most governance tokens, protocol tokens with reward mechanisms, and tokens issued through ICOs or token sales with roadmap promises score high on the Howey factors. The joint panel will apply a modified Howey analysis accounting for the decentralization of each network — a more decentralized protocol scores lower on the "efforts of others" prong.

Airdrops and Forks: No Change

Regardless of asset classification, airdropped tokens and forked assets remain ordinary income at fair market value upon receipt. This treatment stems from Rev. Rul. 2023-14 and applies universally. There is no commodity/security carve-out for airdrop income.

DeFi: Still Largely Unclassified

The vast majority of DeFi tokens are not on the joint panel's initial classification list. That means they default to SEC jurisdiction — and potentially securities treatment — for regulatory purposes. Tax treatment remains property treatment for now.

DeFi investors should expect increased SEC scrutiny of protocol teams and token issuers. For tax purposes, the key immediate action is ensuring you have accurate records of DeFi transaction costs, including gas fees, LP entry/exit prices, and liquidity mining rewards.

For CPAs and Tax Professionals

Client portfolios may need to be analyzed across two dimensions going forward: regulatory classification and tax treatment. While tax treatment is uniform today, planning conversations around wash sale exposure, Section 1256 eligibility, and potential legislative changes require knowing which bucket each asset falls into.

Segmenting client holdings by CFTC-classified vs. SEC-classified assets — even before legislation mandates different treatment — is prudent preparation.

How dTax Helps

dTax is building asset classification labels based on CFTC/SEC registry status directly into portfolio tracking. As the joint panel publishes its quarterly registry updates, dTax will tag each supported asset with its current regulatory classification. This gives investors and CPAs a clear view of which assets sit under which regulatory umbrella — without manually cross-referencing agency publications.

Combined with dTax's support for all IRS-recognized cost-basis methods and its multi-wallet reconciliation engine, you get a complete picture of both your current tax position and your regulatory exposure as the classification framework matures.

Frequently Asked Questions

Does the SEC/CFTC MOU change what I owe in taxes for 2025? No. All crypto remains property for IRS purposes. Your 2025 return is unaffected by the MOU. The classification framework is regulatory, not tax law.

Is Bitcoin definitely a commodity now? Bitcoin is classified as a commodity-nature asset under the MOU framework and falls under CFTC jurisdiction. This formalizes what regulators and courts have generally acknowledged since 2015.

What happens if I hold an SEC-classified token and wash sale rules are extended? If Congress passes wash sale legislation targeting SEC-classified digital assets, you would no longer be able to sell and immediately repurchase those assets to realize a tax loss. Assets in the CFTC column may be excluded from such rules. dTax will flag affected assets when legislation is enacted.

How do I know if a specific token is CFTC- or SEC-classified? The joint Digital Asset Classification Panel will maintain a public registry. dTax will incorporate this registry into its platform, giving you real-time classification labels within your portfolio dashboard.

This article is for informational purposes only and does not constitute tax or legal advice. Consult a qualified tax professional regarding your specific situation.