Does the wash-sale rule apply to crypto in 2026?
Under current federal tax law, IRC §1091 generally disallows losses on wash sales of stock or securities, not on property that is neither. IRS Notice 2014-21 treats convertible virtual currency as property for federal tax purposes. So a same-day (or 30-day window) repurchase of the coin itself after a loss sale is generally not disallowed by §1091 today. That is not the same as saying every crypto-adjacent product is outside the rule: spot crypto ETFs, tokenized securities, and other instruments that are stock or securities for tax purposes can already sit inside wash-sale territory. Proposed bills (including H.R. 9172 and later H.R. 10357) would extend wash-sale treatment to many digital assets if enacted. They are not current law as of September 29, 2026. CryptoTaxEdge classifies the disposal hash (category, treatment, confidence, review flag). It does not decide wash-sale disallowance.
Key takeaways
- IRC §1091 wash-sale disallowance applies to stock or securities (and related short-sale rules in the statute). It does not, by its text, cover property that is neither.
- Notice 2014-21 Q&A-1: convertible virtual currency is treated as property; general property-transaction principles apply.
- Direct holdings of typical coins and tokens are therefore generally outside §1091 under current law, including a same-day repurchase after a loss sale. This page is not advice to harvest losses; firm policy and facts control.
- Instruments that are stock or securities for tax purposes (for example, many spot crypto ETFs and tokenized securities) can already trigger wash-sale analysis under §1091.
- Form 1099-DA box 1i (Wash Sale Loss Disallowed) is for losses from wash sales of tokenized securities treated as stock or securities under §1091 when the broker reports that amount. It is not a universal crypto wash-sale box for every coin sale.
- Proposed legislation would change the statute if enacted. H.R. 9172 (Applying Existing Tax Anti-Abuse Rules to Digital Assets Act) was introduced 2026-06-08 and referred to the House Ways and Means Committee (status Introduced as of September 29, 2026). H.R. 10357 (Digital Asset Tax Certainty Act) includes a wash-sale title; on 2026-09-16 the House Ways and Means Committee ordered it reported as amended by a 38-5 vote. It has not passed the House and is not enacted as of September 29, 2026. Re-verify Congress.gov before relying on any draft. Neither bill is treated here as enacted law.
- We classify on-chain disposals. We do not apply §1091, compute a disallowed-loss amount, or fill box 1i.
What §1091 covers today
Section 1091 disallows a loss from the sale or other disposition of stock or securities if, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after that date, the taxpayer acquires (or enters into a contract or option to acquire) substantially identical stock or securities. The disallowed loss is generally added to the basis of the replacement position. The statute’s operative nouns are stock and securities, not “property” or “digital asset.”
That textual scope is why the property classification in Notice 2014-21 matters for direct crypto. The notice does not rewrite §1091. It answers how existing general tax principles apply to virtual-currency transactions, starting with property treatment.
Grey area: both positions (current law vs proposed change)
Position A (current law, direct crypto as property). Notice 2014-21 treats convertible virtual currency as property. §1091 targets stock or securities. A loss on a direct sale of a typical coin, followed by a repurchase of the same coin inside the wash window, is generally not disallowed by §1091 under that reading. Form 1099-DA’s wash-sale box is scoped to tokenized-security wash sales under the 2026 instructions, which is consistent with §1091 already reaching dual-classification / securities-like instruments rather than every digital-asset sale.
Position B (proposed statutory expansion). Bills introduced in the 119th Congress would amend §1091 so that specified (or traded) digital assets, often excluding qualified U.S. dollar stablecoins under the draft text, are pulled into the wash-sale rules (and related constructive-sale changes in some titles). H.R. 9172 does that by replacing “stock or securities” with “specified assets” and defining specified assets to include digital assets other than a qualified U.S. dollar stablecoin. H.R. 10357’s wash-sale title follows a similar “specified assets / traded digital asset” pattern. As of September 29, 2026, Ways and Means ordered H.R. 10357 reported as amended (38-5) on 2026-09-16; it is not House-passed and not enacted. Committee or JCT materials may describe proposed effective dates (including language pointed at September 14, 2026 in substitute descriptions); those dates are not law. Until a bill is enacted and effective, Position A remains the statutory baseline for this page. Re-check Congress.gov for status and any enacted effective date.
Unsettled edges that are not solved by either headline:
- Whether a particular token is itself a security for federal tax purposes (facts and other authorities), separate from the Notice 2014-21 property framing for convertible virtual currency.
- Substantially identical questions if wash-sale ever extends to digital assets (wrapped equivalents, liquid-staking receipts, closely related tokens).
- Economic-substance or other non-§1091 arguments some practitioners raise even under current law. Those are fact-specific and outside this page’s classification focus.
Wrappers and securities already in scope
A spot Bitcoin or Ether ETF share, a crypto-related equity, or a tokenized security that is treated as stock or securities under §1091 is not “direct property crypto” for wash-sale purposes. The wash-sale analysis for those instruments follows the securities rules firms already use. Form 1099-DA instructions for box 1i require brokers to report disallowed wash-sale losses for tokenized securities treated as stock or securities under §1091 when both the sale and purchase occur in the same account with the same CUSIP (and permit, but do not require, reporting certain other §1091 disallowances). Dual-classification assets and tokenized securities have their own Form 1099-DA vs Form 1099-B coordination rules in the instructions.
Practical split for a CPA book:
| Holding | Typical wash-sale posture under current law (verify facts) |
|---|---|
| Direct BTC / ETH / most tokens in a wallet or non-security broker account | Generally outside §1091 as property under Notice 2014-21 |
| Spot crypto ETF / crypto equity / tokenized security treated as stock or security | Inside §1091; box 1i may appear on Form 1099-DA when reporting rules apply |
| Proposed “specified / traded digital asset” under pending bills | Would move many direct holdings into §1091 if enacted; not law yet |
Classification framing: disposal vs disallowance
A wash-sale question is a loss-timing and basis-adjustment question after a loss disposal. Classification answers what the on-chain event was.
- A sale for fiat, a taxable swap, or another disposal category still needs a typed category and treatment on the hash.
- Whether §1091 (or a future digital-asset wash rule) then disallows the loss is a separate computation on lots, replacement acquisitions, and holding windows.
- Form 1099-DA proceeds and basis boxes do not replace that analysis. Box 1i only reports certain broker-computed wash disallowances for in-scope tokenized securities.
Do not collapse “we bought the coin back the same day” into a classification category. Classify the disposal. Apply wash-sale rules (if any) in the firm’s lot engine and return prep.
How CryptoTaxEdge fits
Classification is a hash in, a record out. POST https://app.cryptotaxedge.com/v1/classify with { "chain", "hash" }. One category, one treatment from the closed enum (disposal, income, non_taxable, expense, needs_review), confidence 0 to 100 as a routing signal, needs_review: true and taxable: null when a treatment cannot be honestly asserted. Confidence is not an accuracy percentage.
For a loss sale followed by a repurchase, we can type the disposal (and the repurchase acquisition) as on-chain events. We do not decide whether §1091 disallows the loss, whether a proposed digital-asset wash rule has become law, or what amount belongs in Form 1099-DA box 1i.
Worked example
Direct coin, current law. On 2026-10-02 a client sells 2.00000000 ETH from self-custody for $5,000 cash. Adjusted basis from records is $7,200. On 2026-10-02 the same day the client buys 2.00000000 ETH back for $5,050. Under Notice 2014-21 property treatment and the current text of §1091, the $2,200 capital loss on the direct ETH is generally not disallowed as a wash sale of stock or securities. Classify the sale hash as a disposal (treatment and confidence as the engine returns). Classify the repurchase acquisition separately. Loss timing and Form 8949 presentation stay with the firm. This example is illustrative, not advice.
Wrapper already in scope. Same economics, but the client sold and repurchased shares of a spot Ether ETF that is a security. §1091 can disallow the loss inside the 30-day window. That analysis is securities wash-sale work, not “crypto is always exempt.”
If a digital-asset wash bill is enacted. Re-run the first example against the enacted text and effective date. Until then, do not treat H.R. 9172 or H.R. 10357 as controlling law.
What CryptoTaxEdge does not do on this page
- We do not decide whether a loss is disallowed under §1091 or under any proposed digital-asset wash rule.
- We do not compute wash-sale adjustments or fill Form 1099-DA box 1i.
- We do not prepare Form 8949 wash-sale columns.
- We do not give tax advice or recommend loss-harvesting trades.
- We do not connect to wallets or take custody. Hash in; category, treatment, confidence, and review flag out.
Classify a transaction at https://cryptotaxedge.com/explorer?src=answers. Enter a hash; ten a day, no signup.
Frequently asked questions
Can I sell Bitcoin at a loss and buy it back the same day in 2026?
Under current law, direct Bitcoin treated as property under Notice 2014-21 is generally outside §1091's stock-or-securities wash-sale rule. Proposed bills would change that if enacted. Confirm status on Congress.gov and apply firm policy. This is not a recommendation to trade.
Do crypto ETFs get wash-sale treatment?
Often yes, because ETF shares are typically securities. Analyze them under §1091 like other securities, not under the direct-coin property gap.
What is Form 1099-DA box 1i for?
The 2026 Instructions for Form 1099-DA say losses from wash sales of tokenized securities must be reported, and for tokenized securities treated as stock or securities under §1091, certain same-account, same-CUSIP wash disallowances are reported in box 1i. It is not a catch-all for every digital-asset loss sale.
Did H.R. 9172 or H.R. 10357 become law?
No, not as of September 29, 2026. Congress.gov shows H.R. 9172 introduced 2026-06-08, referred to the House Committee on Ways and Means, status Introduced. H.R. 10357 (Digital Asset Tax Certainty Act) was ordered reported as amended by Ways and Means on 2026-09-16 on a 38-5 vote; it has not passed the House and is not enacted. Committee markup packets and JCT descriptions of proposed effective dates are not controlling law. Re-verify Congress.gov before publishing or advising.
Does CryptoTaxEdge apply the wash-sale rule?
No. We classify the on-chain disposal and related hops. Wash-sale disallowance, basis carryover, and information-return box 1i amounts stay with the firm and any portfolio or return software that implements §1091.
Accounting firm with crypto clients? See the Firm plan.
This is informational only, not tax advice; verify with a qualified tax professional before filing.