Crypto Wash Sale Rule 2026: Does It Apply? (New Bill Explained)

A cryptocurrency tax loophole that’s helped investors save millions of dollars has survived years of attempts to close it, and Congress is trying again.

In this guide, we’ll walk through everything you need to know about the crypto wash sale rule, including how it can help you save money on your tax bill and whether Congress will end this ‘loophole’.

Does the wash sale rule apply to crypto in 2026?

As of September 18, 2026, the wash sale rule does not apply to cryptocurrency.

The wash sale rule (Section 1091 of the tax code) covers stocks and securities, and the IRS treats cryptocurrency as property. That means you can currently sell crypto at a loss, buy it back, and still claim the loss.

However, that may change in the future. On September 16, 2026, the House Ways and Means committee voted 38-5 to advance the Digital Asset Tax Certainty Act. The bill is not law yet, and it may never become law, but its proposed start date of September 14, 2026 matters if you’re harvesting losses right now. We’ll break down the details below.

What is the wash sale rule?

Before we jump into discussing the wash sale rule, it’s important to understand the rules around capital losses.

What is a capital loss and how can it reduce my tax bill?

When you sell an asset (such as stocks or cryptocurrency) for a lower price than you originally acquired it, you’ll incur a capital loss. 

Capital losses can offset capital gains and up to $3,000 of your personal income. Additional losses above this amount can be rolled forward to future tax years! 

As a result, many investors claim capital losses on stocks, cryptocurrencies, and real estate to minimize their tax bills, a strategy commonly referred to as tax-loss harvesting.

How does the wash sale rule impact capital losses?

The wash sale rule says investors are not allowed to claim capital losses on a security if they buy the same or a substantially identical security within 30 days before or after the sale.

The purpose of the law is to prevent people from selling securities simply to reduce their tax liability.

A disallowed loss isn’t gone forever. It’s added to the cost basis of the replacement shares, so you get the benefit later when you sell them.

Currently, the wash sale rule applies only to stock and securities. The IRS classifies cryptocurrency as property, and it has not issued any guidance applying the wash sale rule to crypto.

As a result, it’s reasonable to assume that the wash sale rule does not apply to cryptocurrency at this time.

It’s important to note that this only covers crypto you hold directly. Shares of a Bitcoin ETF are treated as securities, so the wash sale rule generally applies to them already.

How does the wash sale rule impact my tax bill?

For years, investors who’ve taken profits on stocks and cryptocurrencies have used cryptocurrency wash sales to reduce their tax liability.

Because cryptocurrency is so volatile, some investors choose to harvest their losses multiple times in a given year, then re-enter the same positions shortly afterwards while claiming capital losses on their tax returns. 

For more information, check out our complete guide to crypto tax-loss harvesting. 

What is the economic substance doctrine?

It’s important to remember the economic substance doctrine places some restrictions on claiming wash sales on cryptocurrency.  

Due to the economic substance doctrine, the IRS may not allow you to claim capital losses if there is no ‘economic substance’ behind the transaction other than reducing your tax liability. For example, selling cryptocurrency and then immediately re-purchasing it will likely be seen as a transaction without substance. 

There’s no IRS safe harbor that says how long you need to wait before buying back. The longer you’re out of the position and exposed to price changes, the stronger the argument that your sale had ‘economic substance’.

Will the wash sale rule apply to cryptocurrency?

It might. However, lawmakers have tried to close the crypto wash sale ‘loophole’ several times, and none of those attempts has become law:

• 2021: The House passed the Build Back Better Act, which would have applied the wash sale rule to digital assets. The provision never cleared the Senate, and it was left out of the slimmed-down version that became law in 2022 as the Inflation Reduction Act.
• 2023: The Lummis-Gillibrand Responsible Financial Innovation Act included a crypto wash sale rule. It never received a vote.
• 2023 and 2024: The Treasury Department proposed the change in its budget proposals. Congress didn’t act on either one.

The latest attempt is the Digital Asset Tax Certainty Act (H.R. 10357), which the House Ways and Means Committee advanced 38-5 on September 16, 2026. Section 301 of the bill would extend the wash sale rule to crypto. Here’s how it would work:

• What’s covered: Traded digital assets like Bitcoin and Ethereum, along with options and contracts to buy or sell them. Qualified US dollar stablecoins are excluded.
• The window: You couldn’t claim a loss if you buy the same or a substantially identical asset within 30 days before or after the sale. Wrapped and tokenized versions of a coin would count as substantially identical if they’re economically equivalent.
• The start date: The rule would apply to crypto sold after September 14, 2026.
• Exceptions: Coins you receive as staking or mining rewards wouldn’t trigger a wash sale.
• Exchange reporting: Exchanges could ignore the wash sale rule when reporting your cost basis for sales before January 1, 2028, so tracking it would fall on you.

So why does this bill matter if it may never pass? Because of its start date. September 14, 2026 is earlier than any date the bill could be enacted. If the bill does pass as written, a loss on crypto you sold after that date and bought back within 30 days could be disallowed. Wash sales before that date aren’t affected by the bill.

The bill still has a long way to go. It needs to pass the full House and the Senate and be signed by the President, and if that doesn’t happen before this Congress ends in January 2027, the bill expires. Three earlier bills from this Congress with their own crypto wash sale provisions (H.R. 9172, the PARITY Act, and Senator Cynthia Lummis’s S. 2207) are still sitting in committee. There’s a real chance this bill joins the list of attempts that never became law.

Am I allowed to claim cryptocurrency wash sales?

Under current law, losses from cryptocurrency wash sales can generally be claimed on your tax return, subject to the economic substance doctrine. For crypto sold after September 14, 2026, that could change if H.R. 10357 is enacted as written, which is far from certain. Some taxpayers choose to be conservative and avoid cryptocurrency wash sales entirely.

What can I do if I’m harvesting crypto losses right now?

At this time, the wash sale rule has not been expanded to cryptocurrency, and many investors will reasonably decide that the odds of H.R. 10357 becoming law are low and keep harvesting losses as usual. However, because the bill would reach back to September 14, 2026 if it did pass, investors who’d rather not take that risk have a few options:

1. Wait 31 days before buying back: A repurchase outside the 30-day window isn’t a wash sale under either set of rules.
2. Buy a different cryptocurrency: The rule only applies to the same or a substantially identical asset. Selling Bitcoin and buying Ethereum isn’t a wash sale. Remember, a wrapped version of the same coin would count as substantially identical under the bill.
3. Keep dated records: Record the dates you bought and sold your coins so you can show which sales fall inside the window.
4. Remember that a disallowed loss isn’t lost: It would be added to the cost basis of the coins you bought back, which lowers your gain when you sell later.

How can I tell which one of my assets is currently trading at a loss?

If you hold cryptocurrency in multiple wallets and exchanges, it can be difficult to tell which one of your assets is currently trading at a loss. 

Crypto tax software like CoinLedger can help. Once you import your cryptocurrency transaction history, you’ll be able to view all of your tax-loss harvesting opportunities at a glance. 

How can I manage my crypto taxes?

If you’re looking for an easy way to manage your crypto taxes and harvest your losses, try CoinLedger. More than 700,000 investors use the platform to save money and simplify the process of crypto tax reporting. 

Get started with a free preview report today — there’s no need to add your credit card details until you’re 100% sure your transaction history is accurate.