XRP commodity tax treatment shifted the moment the SEC and the CFTC jointly classified XRP as a digital commodity — alongside Bitcoin, Ethereum, Solana, Cardano, Shiba Inu, and 11 others. Many holders concentrated on the win in court. Fewer people asked what this classification does for their tax bill and what new rules are quietly on the table as a result. Buried inside those rules is a genuine crypto tax loophole — one that commodity futures traders have used for decades — that XRP investors, right now, largely don’t know about.
Please Read This: XRP Classified as Commodity as SEC and CFTC Align, Breakout in Focus
How XRP Commodity Rules and the 60/40 Loophole Affect Gains on Digital Assets
The 60/40 rule and the XRP commodity tax
Chad Steingraber The tax angle became apparent quickly. Right after the classification, he laid out how commodity futures have long operated under a 60/40 rule — the IRS treats 60% of profits as long-term capital gains and 40% as short-term, always, no matter how briefly the position was open.
This is a real issue. The tax code treats commodities like capital assets. This is something equity investors do not understand. Anyone who sells or buys stock in a single year is subject to ordinary income tax rates. Commodity Futures traders avoid this result for years. XRP now falls under the digital commodities category.
Source: Watcher.Guru
The 28% collectible rate for ETFs and ETNs
Digital asset taxation becomes more complex for investors who use structured products. ETFs holding commodity futures generally follow the 60/40 rule and report income through K-1 partnership filings — which, for commodity futures crypto investors, is a decent outcome. ETFs that hold the physical assets are taxed by the IRS as collectibles. This increases the long-term capital gain rate to 28%. That sits notably above the standard 15–20% most equity investors pay, and brokers don’t always flag the difference when they pitch these products.
ETNs work differently still — they function as debt instruments, so the IRS taxes short-term gains as ordinary income, while long-term gains may qualify for capital gains treatment. Steingraber flagged these distinctions when he walked through how different vehicles shape digital asset taxation — and the XRP commodity tax outcome genuinely differs across each one, enough that picking the wrong structure carries a real tax cost.
How to calculate loss rules, mark-to-market, and other issues that are still unclear
Steingraber warned that XRP investors could also run into mark-to market accounting under commodity frameworks. This rule requires traders to report their unrealized losses and gains at the end of each year, even if nothing was sold. Holders who usually defer the XRP tax bill to a sale are now able to manage their annual exposure differently. For investors, however, the capital loss offsets capital gain, and they can use up to $3,000 per year of their remaining losses as ordinary income. Unused losses carry forward indefinitely — and for XRP investors who rode out significant drawdowns, that tool becomes more valuable as the asset recovers.
As of this writing, IRS guidance has yet to be issued on how commodity tax rules apply to XRP holdings in spot and derivatives. The direction, though, is clear — XRP commodity tax rules are moving into territory that historically favored active futures traders, and the 60/40 tax rule crypto investors can access through derivatives is a real, documented advantage. It is unclear how the IRS will eventually treat these structures. A tax professional that closely tracks the space would be a good next step.
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Source: watcher.guru
