---
question: "Does the wash sale rule apply to crypto?"
description: "Not to spot crypto under US law: §1091 covers stock and securities, and the IRS treats digital assets as property. Bills to change that keep appearing."
topic: "Tax & reporting (US)"
jurisdiction: "US"
published: 2026-08-01
author: "Zion Labs"
canonical: https://www.zionlabs.io/answers/does-the-wash-sale-rule-apply-to-crypto
answer: "Not to spot crypto, under current US law. Section 1091 of the Internal Revenue Code disallows a loss only where a taxpayer sells \"shares of stock or securities\" and acquires substantially identical stock or securities within the 30 days before or after that sale. The IRS treats digital assets as property rather than as securities, so the statute as written does not reach a direct sale and repurchase of a token. Bills extending it to digital assets have been introduced repeatedly and none has been enacted, so this is a position to re-check for the tax year you are actually filing."
---

# Does the wash sale rule apply to crypto?

## Answer

Not to spot crypto, under current US law. Section 1091 of the Internal Revenue Code disallows a loss only where a taxpayer sells "shares of stock or securities" and acquires substantially identical stock or securities within the 30 days before or after that sale. The IRS treats digital assets as property rather than as securities, so the statute as written does not reach a direct sale and repurchase of a token. Bills extending it to digital assets have been introduced repeatedly and none has been enacted, so this is a position to re-check for the tax year you are actually filing.

## Nuances and considerations

- **Read the statute's own words before believing anyone's summary.** Section 1091
  applies to a loss on "shares of stock or securities" where substantially
  identical stock or securities are acquired in the 61-day window around the sale.
  It is a rule about a category of property, and spot crypto is not in that
  category under current IRS treatment. That is the entire answer; everything else
  is commentary on how long it will last.
- **"It changed" is usually a bill, not a law.** Proposals to extend the wash sale
  rule to digital assets have been introduced across several Congresses, including
  in digital-asset tax legislation introduced in July 2025 that would revise
  wash-trading rules to cover them. Introduced is not enacted. Before relying on
  any answer here — including this one — check whether the position changed for
  the year you are filing.
- **Exchange-traded products are the genuinely unsettled part, and almost nobody
  mentions it.** Spot bitcoin ETFs are securities registered with the SEC, which
  points toward the rule applying; they are also commonly structured as grantor
  trusts, an analysis that looks through to the underlying property and points the
  other way. Practitioners note both readings, and brokers in practice apply
  wash-sale adjustments on the forms they issue. If your loss is in a product
  rather than in the token itself, do not assume the spot answer carries across.
- **The mirror-image trap.** Because the rule does not disallow the loss, some
  people assume the sale itself did not happen for tax purposes. It did: the
  disposal is real, the gain or loss is realised, and your basis resets. The rule's
  absence changes the timing of a deduction, not whether a transaction occurred.
- **Tokenised securities and security tokens are a different question again,**
  because there the underlying instrument may itself be a security.
- **This answer is US-specific and is general information, not tax advice.** Other
  jurisdictions have their own anti-avoidance rules, some of which do reach crypto.

## Sources

- [26 U.S. Code § 1091 — Loss from wash sales of stock or securities](https://www.law.cornell.edu/uscode/text/26/1091) — Cornell Legal Information Institute. Supports: The exact scope of the statute — "shares of stock or securities", the 30-days-before-and-after window, and the substantially-identical test.
- [Digital assets](https://www.irs.gov/filing/digital-assets) — Internal Revenue Service. Supports: That for US tax purposes digital assets are considered property, not currency, and that general property-transaction principles apply.
- [Notice 2014-21](https://www.irs.gov/pub/irs-drop/n-14-21.pdf) — Internal Revenue Service. Supports: The original IRS guidance establishing property treatment for convertible virtual currency.
- [Bitcoin ETF Approval — What You Need to Know for Tax](https://www.forvismazars.us/forsights/2024/02/bitcoin-etf-approval-%E2%80%93-what-you-need-to-know-for-tax) — Forvis Mazars. Supports: That wash sale rules do not apply to direct crypto asset investment because those assets are not securities, but that because spot bitcoin ETFs are securities registered with the SEC the wash sale rule could apply to them — an open question rather than a settled one.
- [Digital asset tax overhaul bill introduced](https://www.grantthornton.com/insights/newsletters/tax/2025/hot-topics/jul-15/digital-asset-tax-overhaul-bill-introduced) — Grant Thornton. Supports: That legislation introduced in July 2025 would revise wash-trading rules to cover digital assets — i.e. that extending the rule requires a change in the law, which had not been made.

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