Hyperliquid taxes in the US
The IRS treats digital assets as property, and you have to report your own results: Hyperliquid is a decentralised exchange and won't send you a 1099. US tax years run January to December.
What counts
- Closed and partly closed positions: a realised gain or loss in USDC, valued in US dollars.
- Liquidations: a forced close at a loss, plus the liquidation fee.
- Trading fees on opening and closing.
- Funding paid or received while positions are open.
- HIP-3 markets such as trade.xyz, Paragon and Felix, including stock and commodity perps. See the HIP-3 guide.
Spot, HLP vaults and HYPE staking
- Spot trades are disposals of property. Your holding period decides short or long term. PaperTax exports the trades so your tax software can apply your lot method (FIFO, HIFO or specific ID).
- HLP and other vaults: a deposit isn't a sale; each withdrawal is recorded as a gain or loss against the cost basis Hyperliquid reports.
- HYPE staking rewards are generally ordinary income at fair market value when received. PaperTax values them at the daily HYPE close.
Is it Section 1256 (60/40)?
Probably not. Section 1256's 60% long-term / 40% short-term split applies to regulated futures contracts traded on a qualified board or exchange, and Hyperliquid isn't one. Most practitioners treat these positions as property, so most results are short-term capital gains or losses because positions are rarely held for more than a year. Confirm with a CPA or enrolled agent.
Funding payments
There's no IRS guidance specific to perpetual funding. Some treat it as ordinary income or expense; others fold it into each position's gain or loss. PaperTax totals it per market per day and flags it so you can pick one approach and apply it consistently.
Where it goes on your return
Capital gains and losses are usually reported on Form 8949 and summarised on Schedule D. You'll also answer the digital asset question on Form 1040. Crypto tax software such as Koinly or Crypto Tax Calculator can produce Form 8949 from PaperTax's export.
How to get your numbers
- Paste your wallet address at papertax.xyz.
- Choose United States · 2025 (or 2026).
- Export a Koinly or Crypto Tax Calculator CSV, or the audit pack for your CPA. See importing into Koinly or CTC.
Questions
Does Hyperliquid send a 1099?
No. Hyperliquid is a decentralised exchange and doesn't issue tax forms, so you report your own results from on-chain records.
Are Hyperliquid perps Section 1256 contracts?
Generally not, because Hyperliquid isn't a qualified board or exchange. Most practitioners treat the results as capital gains and losses on property, usually short-term. Confirm with a tax professional.
Which tax years does PaperTax cover for the US?
Calendar years 2025 and 2026.