Does the wash sale rule apply to crypto?
As of November 2026 the US wash sale rule does not cover crypto held directly, but it applies to bitcoin ETF shares, and a pending bill would extend it.
The US wash sale rule does not currently apply to crypto you hold directly, such as bitcoin in a wallet or on an exchange. It applies to stock and securities, and the IRS treats crypto as property. Crypto funds are a different case, and Congress is weighing a change.
How does the IRS wash sale rule work?
A wash sale happens when you sell an investment at a loss and, within 30 days before or after the sale, buy substantially identical securities, acquire them in a taxable trade, or get a contract or option to buy them, according to the SEC's Investor.gov glossary. The loss cannot be deducted at that point.
The loss is not gone for good. NerdWallet explains that the disallowed amount is added to the cost basis of the replacement shares, which can shrink a later gain. The rule also reaches purchases in other accounts. In Revenue Ruling 2008-5, the IRS said a loss is disallowed when the seller has their own IRA or Roth IRA buy the same stock, and in that case the basis inside the IRA does not go up.
Does the IRS wash sale rule apply to crypto?
Not to most crypto, as of November 2026. Congress's Joint Committee on Taxation (JCT) wrote in September 2026 that digital assets are not expressly covered by Section 1091 and that the IRS has issued no guidance on the question. The tax side of that strategy is covered in what is crypto tax-loss harvesting.
Does the wash sale rule apply to bitcoin ETFs?
Yes, in the ordinary way. Investor.gov describes spot bitcoin and ether products as exchange-traded commodity trusts whose shares trade on a national securities exchange and are registered with the SEC. The wash sale rule applies to securities, so a loss on fund shares followed by a repurchase of the same fund within 30 days is a wash sale.
Switching between two funds that track the same asset is less clear. NerdWallet notes the IRS has never precisely defined substantially identical, and funds that track the same index are a gray area. The differences between funds and coins are covered in bitcoin ETF vs owning bitcoin.
Will the wash sale rule apply to crypto in 2026?
It could. H.R. 10357, which the House Ways and Means Committee approved 38 to 5 on September 16, 2026, would extend the rule to traded digital assets, other than qualified US dollar stablecoins, according to the JCT description. Tokenized or wrapped versions that are economically equivalent to an asset would count as substantially identical to it. As drafted, it would apply to sales after the bill's introduction in mid-September 2026.
As of Merlin's October 11, 2026 update, the bill had not had a vote by the full House or the Senate, and it still needed the President's signature. No crypto wash sale rule was law at that point.
Rules differ by country and change often. Check the tax authority or a qualified professional for your own situation.
This guide explains how things work. It is not financial, legal or tax advice. Last updated .