Crypto Wash Sale Rule — Does It Apply in 2026?

Stocks have the wash sale rule. Crypto currently doesn't. This means you can sell Bitcoin at a loss, immediately buy it back, and still claim the tax deduction. It's one of the few remaining tax advantages unique to cryptocurrency — but it may not last.

See your tax savings with the Crypto Tax Calculator.

What Is the Wash Sale Rule?

The wash sale rule prevents investors from selling a security at a loss and repurchasing the same or substantially identical security within 30 days — then claiming the loss.

For stocks and bonds, this means:

Sell Stock A at a $5,000 loss on December 20
Buy Stock A back on January 5 (within 30 days)
The $5,000 loss is disallowed — added to your new cost basis instead

Does It Apply to Crypto? (2026 Status)

No — not yet. The wash sale rule (IRC Section 1091) specifically applies to "securities." The IRS classifies cryptocurrency as property, not a security. Since it's not a security, the wash sale rule doesn't apply.

Asset	Wash Sale Rule Applies?
Stocks	Yes
Bonds	Yes
Options	Yes
Mutual funds / ETFs	Yes
Cryptocurrency	No (as of 2026)
Real estate	No
Collectibles	No

How to Use This to Your Advantage

Without the wash sale rule, you can harvest crypto losses without losing your position:

Strategy — Same-day harvest:

Step	Action	Tax Impact
1	Own 2 BTC (cost basis: $90,000)	—
2	BTC drops to $35,000 each ($70,000 total)	—
3	Sell 2 BTC for $70,000	Claim $20,000 loss
4	Immediately buy 2 BTC for $70,000	New cost basis: $70,000

You still own 2 BTC. Your position hasn't changed. But you've realized a $20,000 capital loss that can offset other gains — or up to $3,000 of ordinary income.

With stocks, steps 3 and 4 within 30 days would trigger the wash sale rule and disallow the loss. With crypto, it's perfectly legal.

Tax Impact Examples

Scenario 1 — Offset crypto gains

Transaction	Gain/Loss
Sold ETH for profit	+$30,000
Harvested BTC loss	−$20,000
Net taxable gain	$10,000

Without harvesting, you'd owe tax on $30,000. With it, only $10,000.

Scenario 2 — Offset stock gains

Crypto losses can offset ANY capital gains — including stock gains:

Transaction	Gain/Loss
Sold Apple stock for profit	+$15,000
Harvested SOL loss	−$15,000
Net taxable gain	$0

Scenario 3 — Offset ordinary income

If you have no capital gains to offset, up to $3,000 of crypto losses can offset ordinary income (wages, salary). Excess carries forward indefinitely.

Will Congress Close This Loophole?

Multiple proposals have attempted to extend the wash sale rule to crypto:

Bill	Status
Build Back Better Act (2021)	Failed
Biden FY2024 Budget Proposal	Proposed, not enacted
Various bipartisan bills	Introduced, not passed

The pattern: Congress keeps trying, but hasn't succeeded yet. It's widely expected that the wash sale rule will eventually apply to crypto — the question is when.

If it passes, it would likely:

Apply the same 30-day window
Include "substantially identical" digital assets
Possibly cover only the same token (BTC wash sale with BTC) but not cross-token (sell BTC, buy ETH)

Best Practices While It Lasts

Harvest losses aggressively. If you have crypto positions at a loss, consider harvesting them before legislation changes. You can always rebuy immediately.

Document everything. Keep records of the sell and rebuy as separate transactions. Even though it's legal, clear documentation protects you.

Don't confuse this with stocks. If you sell Bitcoin at a loss and buy a Bitcoin ETF within 30 days, the wash sale rule MAY apply — because the ETF is a security. The IRS hasn't ruled on this specifically, but it's a risk.

Watch for "substantially identical" guidance. If the wash sale rule extends to crypto, selling BTC and immediately buying WBTC or a BTC-pegged token could be treated as a wash sale.

Learn more about tax-loss harvesting strategies for crypto. Use the Capital Gains Tax Calculator to see how losses affect your tax bill.