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The aim is to analyze the classification of cryptocurrencies under US tax law and propose improvements for regulatory alignment.

June 27, 2026Intertax

Crypto Investment Funds and the Limits of US Tax Law: Functional Classification and Global Regulatory Convergence

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This article examines the classification challenges of cryptocurrencies under US tax law, suggesting a new functional approach and global alignment.

The aim is to analyze the classification of cryptocurrencies under US tax law and propose improvements for regulatory alignment.
Proposes a Functional Exposure Test for registered investment companies (RICs).
Introduces a Four-Factor Framework for categorizing spot-token income as commodities.
Develops a Reporting Interoperability Solution to align US reporting with international standards.
Identifies distortions in investment outcomes caused by the current property classification of cryptocurrencies.
Suggests improved tax efficiency without compromising investor protection through proposed frameworks.
Calls for a more administrable tax system that aligns with international cryptocurrency regulations.

Rifat Azam (2026) studied this question.

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This article examines the classification challenges of cryptocurrencies under US tax law, suggesting a new functional approach and global alignment.