Crypto and the Wash Sale Rule: What’s Changing
Tax-loss harvesting has been popular in crypto precisely because the wash sale rule historically didn't apply. That edge may not last.
The current landscape
The wash sale rule in IRC § 1091 targets "securities." Because the IRS treats crypto as property, many positions have fallen outside it — but legislative proposals have repeatedly sought to close the gap.
Document defensively
- Record repurchase dates for any harvested asset
- Note "substantially identical" considerations
- Keep a clear audit trail
Rules can change mid-year. Build harvesting records into your intake so you're ready either way.
Pair this with disciplined cost basis methods to keep losses defensible.
Frequently asked questions
Does the wash sale rule apply to crypto?+
Historically the wash sale rule under IRC § 1091 applies to “securities,” and crypto is treated as property — but proposals have sought to extend it. Confirm current law before relying on it.
What is tax-loss harvesting in crypto?+
Selling assets at a loss to offset gains. Because rules may change, document every repurchase date and keep a defensible record.
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