Crypto Wash Sale Rule: 2026 IRS Rules

You sell a bag of BTC in late December. You buy it back on January 5. Does the wash sale rule wipe the loss? For most spot crypto, no. Section 1091 covers stock or securities. The IRS still treats convertible virtual currency as property. A spot Bitcoin ETF is a different asset.

TokenTax dates the sale and the rebuy so Form 8949 lots stay lined up if Congress later writes a 61-day window.

The wash sale rule (IRC §1091) applies to stock or securities, not property in general. A wash sale happens when you sell stock or securities at a loss and buy substantially identical stock or securities within a 61-day window (30 days before through 30 days after the sale).

Because the IRS treats convertible virtual currency as property, most spot crypto sales are generally not subject to §1091 under current federal rules, even if you sell at a loss and buy the same coin back soon after.

Pro tip
One important exception is crypto exposure held through securities (e.g., certain ETFs), where wash-sale rules may apply.

Under 26 U.S. Code § 1091, if a security you hold has lost value, you cannot sell it to claim the loss and buy it back within 30 days.

This rule prevents taxpayers from using "artificial" losses to offset their gains and lower their capital gains tax liability.

The main idea of the rule is that a loss is disallowed when a taxpayer sells stock or securities at a loss and acquires substantially identical stock or securities within the 61-day window.

The federal wash-sale rule under Section 1091 generally does not apply to most spot cryptocurrency transactions because it applies only to stock and securities.

As a result, selling crypto at a loss and quickly repurchasing the same asset does not currently trigger an automatic wash-sale disallowance, although the law could change.

Crypto wash sales are different from wash trading. Wash trading involves transactions intended to create misleading market activity and may violate exchange rules or market-manipulation laws.

US lawmakers and crypto wash sales

Section 1091 still applies to stock or securities, not to property in general. Notice 2014-21 treats convertible virtual currency as property. That's why most spot Bitcoin, ETH, and SOL sales sit outside the 61-day window.

The latest public bill is H.R. 9172, the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act, introduced June 8, 2026, and referred to the House Ways and Means Committee. It is not yet law.

Continue to monitor the bill's progress. As drafted, the wash sale changes would apply to dispositions after the bill's introduction date. A December sale and a January rebuy this year could be retroactively captured if it becomes law.

The bill would also go beyond wash sales, extending constructive sale rules to digital assets and replacing "stock or securities" with a broader "specified assets" category. Qualified U.S. dollar stablecoins are carved out.

A same-day rebuy of spot crypto does not, under current federal rules, automatically disallow the capital loss. Related-party sales can still block a loss. ETF shares and tokenized stocks follow securities rules. Keep dates, proceeds, and basis so Form 8949 is clean if the statute later changes.

Safer ways to harvest crypto losses

There are safer strategies that are effective in accomplishing this same goal:

1. If you rebuy a crypto asset after the 30-day period passes, your actions will no longer be classified as wash sale trading and will not trigger any future crypto wash sale rule, presuming the rule is the same as that currently in effect for securities.

2. You may trade the depreciated asset for a coin with which its price is closely correlated. You would then hold the correlated coin for more than 30 days before repurchasing the original asset. 

Pro tip
For more on this topic, see our comprehensive, expert article on crypto tax loss harvesting.

With specific attention to the tax regulations or crypto wash sale rule questions in your country, TokenTax crypto tax software calculates capital gains totals using various crypto accounting methods, including FIFO, LIFO, HIFO, the average cost method, and our proprietary Minimization.

With Minimization, we've built on the HIFO accounting method with a proprietary approach that automatically adjusts based on an individual's tax rate to minimize crypto taxes as much as possible. And if you ever need further assistance or clarity about anything related to crypto and taxes, including the crypto wash sale rule, our crypto tax professionals are available to assist.

If there are changes to the rule, it could have significant implications for crypto investors. A modification to this rule would impact the strategies some investors employ to manage their portfolios and minimize tax liabilities. 

If Congress later extends section 1091 to digital assets, a year-end sale and an early-January rebuy could fall in the same 61-day window. Until that is law, the live rule is still stock or securities.

TokenTax keeps the sale date and the rebuy date on the lot, so you can show what happened in either case.

Changes to the rule could also increase scrutiny from tax authorities and regulatory bodies. Investors should stay informed about any changes to the rule and proactively adjust their tax strategies accordingly.

If you hold ETF shares or tokenized stock, have a crypto tax specialist check the 61-day window.

To see which lots are at a loss, compare each holding's current value to its cost basis. TokenTax flags lots trading below basis so you can decide what to sell before year-end. Your accounting method can change which lot is the loss.

See crypto accounting methods.

Regularly reviewing your portfolio and assessing individual asset performance with tools like Zerion enables you to make informed decisions, such as tax-loss harvesting or strategic asset allocation.

By staying vigilant and leveraging available tools, you can optimize your investment strategy and mitigate potential losses in the dynamic and famously volatile crypto market.

Pro tip
Your choice of accounting method can affect how you handle wash sales. For more on this, see our expert article to help you identify the correct crypto accounting method.

Wash trading in the crypto market involves artificially inflating trading volumes by executing buy and sell orders for the same asset to create misleading market activity. 

Currently, wash trading is generally frowned upon by regulatory authorities. However, the legality of wash trading in the crypto space varies by jurisdiction. Wash trading can raise concerns about market manipulation or fraud, depending on the facts and the location of the trading, so it is not something to treat as “safe” behavior. Tax loss harvesting is a generally safer approach.