Congressional lawmakers are moving again on the crypto wash sale loophole, the quirk in the US tax code that lets digital asset holders sell at a loss, claim the deduction, and buy the same coin back minutes later. CNBC reported on July 28 that the push has picked up momentum around H.R. 9172, the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act, introduced on June 8 by House Budget Committee Chairman Jodey Arrington, a Texas Republican. The Treasury Department estimated in 2024 that closing the gap would raise nearly $24 billion over a decade. For anyone running a corporate crypto treasury or a personal trading book, the change would rewrite year-end tax planning.
The wash sale rule is a provision in Section 1091 of the tax code that disallows a capital loss deduction if an investor buys back a substantially identical position within 30 days before or after selling it. It has applied to stocks and securities since 1921. Because the Internal Revenue Service treats digital assets as property rather than securities, crypto has sat outside the rule entirely.
Key takeaways
- H.R. 9172 would replace the phrase “stock or securities” in the wash sale statute with “specified assets,” pulling most digital assets into the 30-day rule.
- Treasury’s 2024 estimate put the revenue from applying wash sale rules to crypto at nearly $24 billion over ten years.
- Qualified US dollar stablecoins and tokens received through staking or mining are carved out.
- The bill also extends constructive sale and short-sale rules to digital assets, and treats wrapped or tokenized versions of an asset as substantially identical to the original.
Published: July 29, 2026 09:30 UTC
What the bill actually changes
The mechanism is a single phrase swap. H.R. 9172 replaces “stock or securities” in the wash sale statute with “specified assets,” a term drafted to cover actively traded digital assets. A bitcoin holder who sold at a loss in November and rebought the following week would see that deduction disallowed, with the loss folded into the cost basis of the replacement position instead.
The bill goes further than the wash sale fix alone. It extends constructive sale and short-sale treatment to digital assets, closing a second route traders use to lock in gains while deferring the tax bill. It also addresses a problem specific to crypto markets: the text treats tokenized and wrapped versions of an asset as substantially identical to the economically equivalent original. Selling ether at a loss and immediately buying wrapped ether would not sidestep the rule.
Why the exemptions matter
Two carve-outs shape who wins and who loses. Qualified US dollar stablecoins are excluded, so routine swaps between dollar-pegged tokens would not trigger wash sale math. Digital assets received through validation activities, meaning staking and mining rewards, are also excluded. Staking is the process of locking tokens in a proof-of-stake network to help validate transactions in exchange for newly issued tokens.
The practical effect is a tax code that treats crypto held for trading differently from crypto used for payments or earned through network participation. That distinction has been the direction of travel in Washington for two years. A separate bipartisan effort, the Digital Asset PARITY Act from Representatives Steven Horsford and Max Miller, pairs a similar wash sale expansion with a stablecoin safe harbor and staking deferral, suggesting the trade is negotiable rather than settled.
Industry response has not been uniform opposition. Lawrence Zlatkin, Coinbase’s vice president of tax, told the House Ways and Means Committee on June 9 that the rule should apply to digital assets, but only as part of a broader package with an 18 to 24 month implementation runway.
What happens next
H.R. 9172 sits in the House Ways and Means Committee and has not been scheduled for markup. Wash sale expansion has appeared in draft tax legislation repeatedly since 2021 without clearing both chambers; the provision was stripped from the Inflation Reduction Act before enactment in 2022. Arrington’s sponsorship changes the political math, because a Republican budget chairman carrying a crypto tax increase removes the partisan framing that sank earlier attempts.
Timing is the constraint. The CLARITY Act market structure bill is expected to miss its window before the Senate’s summer recess, which leaves tax as one of the few crypto vehicles still moving. State legislatures are not waiting either, as the industry’s lawsuit against Illinois over a 0.2% digital asset tax and Argentina’s move to let investment funds buy crypto both show.
For treasurers and traders, the planning question is whether to harvest losses under current rules while the window is open. Nothing changes until a bill passes, and none has yet.
Frequently asked questions
Does the crypto wash sale rule apply in 2026?
No. As of July 2026, the wash sale rule under Section 1091 still applies only to stock and securities. The IRS treats digital assets as property, so crypto investors can sell at a loss, claim the deduction, and repurchase immediately without waiting 30 days.
What would H.R. 9172 change for crypto investors?
It would disallow a loss deduction if an investor acquires a substantially identical digital asset within 30 days before or after the sale. The disallowed loss would be added to the cost basis of the replacement position rather than lost outright, deferring the deduction until a genuine exit.
Are stablecoins covered by the proposed rule?
No. The bill carves out qualified US dollar stablecoins, along with digital assets received through staking and mining. Swaps between dollar-pegged tokens would not be subject to the 30-day restriction under the current draft text.
