Crypto Wash Sale Rules: What Section 1091 Covers and What It Does Not

The wash sale rule is one of the best-known limits on tax-loss harvesting. Whether it reaches cryptocurrency depends on the words of the statute, and those words have not changed.

This page was updated in October 2026 to reflect the statute as currently in force.

What section 1091 says

Section 1091(a) disallows a loss from the sale or other disposition of shares of stock or securities if, within a period beginning 30 days before and ending 30 days after the sale, the taxpayer acquires substantially identical stock or securities, or enters into a contract or option to acquire them. For this purpose, stock or securities include contracts or options to acquire or sell stock or securities, except as provided in regulations. The disallowed loss is not lost forever; section 1091(d) adjusts the basis of the replacement stock or securities.

Why ordinary crypto is generally outside it

Notice 2014-21 treats convertible virtual currency as property. Ordinary cryptocurrency is not a share of stock and is not a security in the sense the statute uses. As of this update, section 1091 continues to be written in terms of stock or securities and has not been amended to name digital assets. So selling a coin at a loss and buying the same coin back generally does not trigger section 1091.

That does not make every sale-and-repurchase bulletproof. A loss still has to be real, the sale has to be an actual disposition, and sales to related persons are governed by a separate rule in section 267 that disallows the loss outright. See selling crypto to family.

Where the rule can apply

Some digital assets are securities. The broker regulations recognize tokenized securities and, for those, refer to the basis and holding period adjustments required for wash sales in Treas. Reg. 1.6045-1. If a token represents stock or another security, assume section 1091 applies to it like any other security. Exchange-traded products that hold crypto are shares, not crypto, and should be analyzed as such.

Section 1256 contracts are another special case. Section 1256(f)(5) says the wash sale rule does not apply to losses taken into account under the year-end mark-to-market rule. See bitcoin futures and section 1256.

Practical points for loss harvesting

Identify the lot you are selling before the sale, so the loss you realize is the one you intend. See specific identification and standing orders. Remember that a repurchase starts a new holding period. The statute in force on the date of your sale is the one that controls, so check for changes before relying on this page.

For the broader strategy, see crypto tax-loss harvesting, and for the opposite move in low-income years, gain harvesting.