Crypto Wash Sale Rule 2026: What US Law Says Today

As of October 23, 2026, the US wash sale rule does not apply to ordinary crypto. Internal Revenue Code section 1091 covers "stock or securities," the IRS classifies digital assets as property, and no enacted law has changed that. A bill that would extend the rule to traded digital assets, H.R. 10357, passed the House Ways and Means Committee 38 to 5 on September 16, 2026. It has not passed the full House and is not law.

Where the rule stands today, item by item

Most pages on this topic flatten the picture into "yes" or "no." The law is really four separate questions, and each has its own answer and its own date. Everything below was read from the primary document named in the last column and checked on October 23, 2026.

Two points in that table are easy to miss. First, the IRS pages read for this guide never say, in so many words, that the wash sale rule does not apply to ordinary crypto. The conclusion rests on the wording of section 1091 and on the property classification, which is how most practitioners read it, but you will not find a sentence in IRS guidance that settles it. Second, the exception is real and already in force: a token that is legally a stock or security is inside section 1091 today, and brokers have to report disallowed losses on it.

What section 1091 actually does to a stock sale

To see what a change would mean for crypto, you need the mechanics of the rule as it works for shares. Publication 550 states it in a single paragraph. A wash sale occurs when you sell or trade stock or securities at a loss and, within 30 days before or after the sale, you buy substantially identical stock or securities, acquire it in a fully taxable trade, acquire a contract or option to buy it, or acquire it for your IRA or Roth IRA. The publication adds that a spouse or a corporation you control buying the shares also counts.

The window runs 30 days before and 30 days after, so it spans 61 days with the sale date in the middle. A purchase two weeks before the sale can trigger the rule just as a purchase two weeks after can. That backward reach surprises people who think of the rule as a "don't buy back right away" rule.

When the rule applies, the loss is not erased. It moves into the replacement shares:

If you buy more or fewer shares than you sold, the publication matches replacement shares to sold shares in the order bought, starting with the first shares bought. "Substantially identical" is a facts-and-circumstances test. Ordinarily the stock of one corporation is not substantially identical to the stock of another, though convertible preferred stock with the same voting and dividend terms can be.

Why ordinary crypto falls outside, and where that argument is thin

The argument for "outside" has two legs. The statute names "stock or securities," and the IRS says crypto is property. Bitcoin is not a share of a corporation or a debt instrument, so section 1091 has nothing to attach to. That is also why the Schedule D instructions carve in tokenized securities by name: a token that is legally a stock is within the words of the statute, and the IRS says so.

The thin parts of the argument are worth knowing, because they explain why careful advisers still describe it as a position and not a certainty.

Three lots, one December loss sale, two rule sets

The numbers below are an illustration with invented prices, chosen to make the arithmetic visible. They are not market data and not a recommendation.

Inputs. A taxpayer holds three lots of bitcoin in one account and uses specific identification to choose which lots to sell:

On December 10, 2026 the taxpayer sells lots A and B, 0.70 BTC in all, at an illustrative $70,000 per BTC, for proceeds of $49,000. The taxpayer also has $9,000 of net long-term capital gain from earlier in the year and no other capital transactions.

Step 1: the loss. Basis of lots A and B is $38,000 plus $31,500, or $69,500. Proceeds are $49,000. The loss is $20,500. Both lots were held less than a year, so it is a short-term loss.

Step 2: the year's netting. Capital losses first offset capital gains. The $20,500 short-term loss against the $9,000 long-term gain leaves a net capital loss of $11,500. Under section 1211(b), a non-corporate taxpayer can deduct up to $3,000 of net capital loss against other income ($1,500 if married filing separately). So $3,000 reduces ordinary income this year, and $8,500 carries forward. Under section 1212(b), the carryover keeps its character, so the $8,500 stays short-term.

Step 3: the repurchase. The next morning the taxpayer buys 0.70 BTC back, again at $70,000, for $49,000. What happens to the $20,500 loss depends on the rule set.

Look at the last row. Under today's law the taxpayer has taken the loss now, and the repurchase resets basis to the lower price, so the loss is traded for a larger future gain. The loss is a timing benefit, not a free one. Whether that timing benefit is worth anything depends on future tax rates and on whether the coins are ever sold at a gain. The stock-style column is the same economics with the timing benefit removed.

Two cautions about the example. The $3,000 deduction applies only to the net loss that remains after gains are offset, so a taxpayer with $50,000 of gains from other trades would use the loss to cancel gain first, and the $3,000 figure would not come into play. And lot C was left out deliberately: choosing which lots to sell is a separate question, covered in our guide to wallet-by-wallet cost basis, because the lot you identify changes both the amount and the character of the result. The US crypto tax guide covers the surrounding filing mechanics, and CalculatorVillage has finance calculators if you want to run a loss against your own income.

What H.R. 10357 says, read from its text

The Digital Asset Tax Certainty Act is H.R. 10357. The GovInfo text of the bill as introduced, section 301, amends section 1091 in five ways that matter here.

The committee approved the bill 38 to 5 on September 16, 2026, according to the committee's own release, which describes it as applying "existing anti-abuse rules to digital assets, including the 'wash sale' and 'constructive sale' rules." Secondary reporting says the committee adopted a chairman's substitute amendment and gives September 14, 2026 as the introduction date that sets the effective date. That date, and any changes the substitute made to the introduced text, were not verified against the substitute itself for this guide, so treat both as unconfirmed. Secondary reporting also cites a Joint Committee on Taxation estimate of about $1.7 billion in revenue over ten years for the wash sale provision.

The retroactivity question

The most common error in coverage of this bill is to call it either "retroactive" or "not retroactive." The text offers a more specific answer. If enacted as introduced, it applies to dispositions after the date of introduction. A bill introduced in September and signed months later would therefore cover sales made in between, before anyone knew it was law. That is retroactive to the introduction date and not past it. It would not reach back to sales from earlier years.

Whether the effective date changes before enactment, or whether the bill passes at all, is unknown. The full House has not voted, and the Senate has not acted. An earlier attempt shows how these efforts have gone: section 138152 of the Build Back Better Act (H.R. 5376, October 2021 text) would have extended section 1091 to digital assets, and a digital-asset wash sale rule was not enacted. If you are deciding something with real money attached, the status to track is the bill's own page and the Ways and Means release, not summaries.

How the bill's definitions would sort common trades

Even as a proposal, the bill's definitions show where the line would fall, which helps in understanding the concept. The table applies the introduced text to common situations. It describes how the draft would work and says nothing about current law.

The "economically equivalent" standard is where interpretation would matter most. The text does not define it further in the sections read for this guide, so a wrapped or tokenized token that tracks the coin closely would likely be argued to meet it, while a different network's native coin would likely not.

Where a wash sale rule already applies to crypto-related holdings

The "no wash sale rule for crypto" answer has two boundaries that matter to anyone holding more than plain coins.

Tokenized securities, with the IRS's own example

A token that is legally a stock or security is inside section 1091 today. The Form 1099-DA instructions require brokers to report the disallowed loss for such tokens in box 1i, and they work an example. In September 2026 a customer, Alex, buys 100 units of a tokenized security ("ABC") for $1,000. In October 2026 Alex sells the 100 units for $600, a $400 loss. Within 30 days Alex buys 75 units of ABC with the same CUSIP number in the same account. Because only 75 of the 100 units were replaced, the instructions disallow three quarters of the loss, $300. The broker reports $600 of proceeds in box 1f, $1,000 of basis in box 1g and the $300 disallowed loss in box 1i, and the $300 is added to the basis of the 75 new units. The remaining $100 of loss is allowed. The Form 1099-DA walkthrough explains the other boxes on the same form.

The instructions also limit what the broker has to catch. A broker applies the rule only when the sale and the purchase happen in the same account for the same CUSIP number. It does not have to apply it when the replacement was bought in another account, when the replacement was transferred to another account before the wash sale, or when the customer has told the broker in writing of a valid and timely mark-to-market election under section 475. None of that changes what the customer owes. The statute applies to the customer, and a sale at a loss followed by a purchase in a different account is still a wash sale for a tokenized security. The broker's form simply will not show it.

Shares of a bitcoin fund

The shares of a spot bitcoin exchange-traded fund are shares. The reading of section 1091 that follows from its words is that a loss on selling them, followed by buying the same fund within the 61-day window, is the textbook wash sale, even though the fund holds nothing but bitcoin. This guide found no IRS statement that treats bitcoin fund shares differently, so the plain reading stands as the reading, and the tax treatment of a particular fund is something to confirm in its prospectus and with a tax professional.

The harder question is whether two different funds are "substantially identical." Publication 550 says it is a facts-and-circumstances test and that stock of one corporation is ordinarily not substantially identical to stock of another. Two funds from different sponsors hold the same asset, charge different fees and sit in different legal trusts. Nothing in the pages read for this guide says which way that comes out for bitcoin funds, and a position that depends on it is exactly the kind to take to a professional before relying on it. How these funds are built, and why their shares differ from owning coins, is the subject of our guide to how spot bitcoin ETFs work.

Everything else in H.R. 10357 that touches a loss or a trading year

The wash sale section is one of more than twenty sections. A reader who trades should know which others interact with it, because the bill's own table of contents shows the wash sale rule arriving alongside provisions that cut the other way.

Two cautions. The table describes the bill as introduced; the committee approved a chairman's substitute whose text was not verified for this guide, so any row could differ. And the bill's committee release lists broader goals, such as streamlined reporting and a voluntary disclosure program, that do not bear on loss treatment and are left out here.

The practical reading for someone deciding whether to care: the same bill that would add a wash sale rule for ordinary coins would also add trader elections and exempt small fee payments from 2028. A single provision of a larger package can be amended away in the Senate, so tracking the bill as a whole matters more than tracking one section. Other countries took different routes: Canada denies a loss under its 61-day superficial loss rule, covered in our guide to crypto losses in Canada, and the UK matches disposals to purchases before it uses its share pool, as the HMRC crypto tax guide works through.

The surrounding tax questions that this page leaves alone, such as staking income and what the 1099-DA does and does not show, sit in the crypto taxes topic hub. If you expect to sell lots before year end, read the wallet-by-wallet cost basis guide first, because the lot you identify settles whether the loss is short-term or long-term.

Frequently Asked Questions

Does the wash sale rule apply to crypto in 2026?

Not to ordinary crypto under current law. Section 1091 covers stock or securities, and the IRS treats digital assets as property. It does apply to a digital asset that is also a stock or security for tax purposes, such as a tokenized security. This status was checked on October 23, 2026.

Can I sell crypto at a loss and buy it back right away?

Under current law the wash sale rule does not disallow the loss on ordinary crypto, and basis resets to the repurchase price. Other doctrines, including economic substance under section 7701(o), still exist, and the rule could change if the pending bill were enacted. Confirm your own position with a tax professional.

What is H.R. 10357 and has it passed?

It is the Digital Asset Tax Certainty Act. The House Ways and Means Committee approved it 38 to 5 on September 16, 2026. The full House has not voted and it is not law. As introduced, it would extend section 1091 to traded digital assets other than qualified US dollar stablecoins.

Would a new wash sale law apply to trades I already made?

As introduced, the bill applies to dispositions after the date of its introduction, not to earlier years. Sales made between introduction and enactment could be covered if the bill passes with that date. The effective date in the committee-approved version was not verified from its text.

Does the 1099-DA show wash sales for crypto?

Only for tokenized securities. Box 1i of Form 1099-DA reports wash sale loss disallowed for those. For ordinary crypto, the form reports proceeds and, for covered securities from 2026 sales, basis, without a wash sale adjustment.