Can You Deduct Crypto Losses?

Crypto losses are treated like losses on stocks — they first offset any capital gains you have, and if your losses exceed your gains, you can deduct up to $3,000 of the remaining loss against other income like wages or salary.

Any loss beyond the $3,000 annual cap carries forward to future years, where it continues to offset gains or earn you that $3,000 deduction until it's used up.

Unlike stocks, crypto is not subject to the wash sale rule — at least not yet — which means you can sell a losing position, claim the loss, and immediately buy back the same coin without waiting 30 days.

To claim a loss, the sale has to actually happen — just watching your portfolio drop in value doesn't give you a deduction, you have to sell or otherwise dispose of the asset.

If your crypto became genuinely worthless — meaning the coin went to zero and the blockchain is abandoned — there are special rules for claiming that loss, and it's worth talking to a tax professional about how to document it properly.