The wash-sale rule does not apply to your crypto. Here is what that is worth, and how long it lasts.
Sell a stock at a loss and buy it back within 30 days and the IRS disallows the loss — that is §1091, and every investor has been trained to fear it. It does not reach digital assets. §1091 disallows losses on stocks or securities, and the IRS has treated convertible virtual currency as property since Notice 2014-21. Property is not a security. You can sell at a loss, buy back the same minute, and keep the deduction.
That is a real advantage over every other asset class you own, and it is the one crypto tax advantage with a visible expiry date: bills to extend the rule to digital assets have been introduced in successive Congresses. None has passed. Every version so far has applied from a future date rather than backwards.
What this page is. The current position with its sources, a check on whether a specific sale-and-repurchase pair would be caught if the rule changed, and an honest account of the thing that can bite you today — which is not §1091. It is information, not advice. ClearBasis is tax software — not a law firm, accounting firm or tax preparer.
Where the rule stands today
| Question | Today | Basis | Status |
|---|---|---|---|
| Does §1091 disallow a crypto loss on repurchase? | No | §1091 covers "stocks or securities"; crypto is property (Notice 2014-21) | settled |
| Can you sell at a loss and rebuy immediately? | Yes, under §1091 | No holding period is imposed by the section | allowed |
| Could that change? | Yes — proposals recur | Bills extending wash-sale treatment to digital assets have been introduced repeatedly and not enacted | watch |
| Would a change reach back to this year? | Not as drafted so far | Every version to date applies from a stated future date | prospective |
| Is there any risk in same-second round trips? | Yes — a different one | Economic substance and substance-over-form apply regardless of §1091 | real |
Check a pair
Sold something at a loss and bought it back? This tells you whether that pair sits inside the 30-day window a future rule would use — and whether it is tight enough to be a different kind of problem now.
This runs entirely in your browser — the dates never leave the page. Want it done across your whole history instead of one pair? A free scan pairs every loss disposal against every repurchase automatically, in both directions, and shows the total exposed.
The half everyone forgets
The window runs both ways
§1091 reaches 30 days before the sale as well as after. Someone who bought the dip on the 5th and sold their old lot at a loss on the 20th has a pair, even though they never "bought it back". If the rule is extended, that is the shape most people would be caught by.
A disallowed loss is deferred, not destroyed
Where §1091 applies, the disallowed loss is added to the basis of the replacement position and the holding period carries over. You get it back when you finally sell for good. The cost is timing — which still matters if you needed the loss this year.
Substance over form is live today
A loss taken and reversed within the hour leaves you holding exactly what you held before. The IRS can challenge that under general doctrines without §1091, and 1099-DA reporting from 2025 makes the pattern visible for the first time. Occasional harvesting is not that. Systematic same-second cycling is.
A loss is only worth what it offsets
Realized capital losses offset capital gains first. Only $3,000 of any excess reduces ordinary income in a year; the rest carries forward indefinitely. Harvesting $40,000 of losses against no gains does not produce a $40,000 deduction.
Questions people actually ask
Is this a loophole I should worry about using?
It is the plain reading of the statute: §1091 names stocks and securities, and the IRS classified virtual currency as property in 2014. Practitioners have relied on it for a decade. What draws attention is not harvesting — it is a pattern with no economic purpose beyond the deduction.
What if the rule changes in December?
Then it applies from whatever date the statute names. Nothing enacted so far has reached backwards, and a retroactive capital-loss rule would be unusual. The practical read: this year's harvesting is this year's, and next year's plan should assume the window may close.
Does selling to a different exchange and rebuying count?
Under §1091 as written for securities, the rule follows the taxpayer, not the venue — buying the replacement anywhere counts, including in an IRA. Since the section does not currently reach crypto, the question is academic today; if it is extended, expect the same treatment.
What about selling BTC and buying WBTC — or ETH and stETH?
For securities, the test is "substantially identical", which is narrower than "similar". Nobody knows how it would be applied to wrapped or staked derivatives of the same coin, because no authority has had to decide. If the rule arrives, that is the first fight.
Does the exchange track this for me?
No. A 1099-DA reports proceeds and, from 2026 activity, basis for covered lots — it makes no wash-sale adjustment for digital assets because there is none to make. What your 1099-DA actually says →
Do it across your whole year, not one pair
A free scan reads your exchange export, rebuilds the cost basis, and pairs every loss disposal against every repurchase of the same asset in both directions — so you see the total that would be exposed if the rule changes, and which pairs are tight enough to be worth a second look now.
Run the free scan Or check the 15 September deadline →
Sources: IRC §1091(a), (d) · IRS Notice 2014-21 (virtual currency is treated as property) · IRC §1211(b) and §1212(b) (the $3,000 limit and the carryforward). Legislative status: proposals to extend wash-sale treatment to digital assets have been introduced in successive Congresses and none has been enacted as of 27 August 2026. Retrieved 27 August 2026.