The Crypto Wash Sale Rule (and Why It Doesn't Apply Yet)

The wash sale rule prevents stock investors from claiming a tax loss if they buy the same or a substantially identical security within 30 days before or after the sale, but as of now, that rule does not apply to cryptocurrency.

That gap means crypto investors can sell a losing position on Monday, book the loss for tax purposes, and buy the same coin back on Tuesday — a strategy sometimes called tax-loss harvesting.

This is a meaningful advantage over stocks, and many crypto investors use it intentionally at the end of the year to reduce their taxable gains.

Congress has repeatedly proposed extending the wash sale rule to crypto, and it's worth paying attention to those proposals because the window to use this strategy may not stay open forever.

If you plan to use tax-loss harvesting with crypto, pair it with careful cost basis tracking so you know which lots to sell and what your actual loss is before you pull the trigger.