Plain English
The wash-sale rule (Section 1091) disallows a loss on a security if you repurchase the same or substantially identical security within 30 days. Critically, this rule applies to securities — and crypto is currently classified as property for tax purposes, not as a security. So crypto wash sales are not disallowed under current US law.
How it actually works
You sell BTC at a loss on Monday, buy it back on Tuesday — under current rules the loss is deductible. Same trade with Apple stock: loss disallowed, basis transferred to the new lot. Several proposals (Build Back Better, 2024 Treasury proposals) would extend wash-sale rules to crypto; none has yet passed. Stocks held alongside crypto remain under traditional wash-sale rules.
What it means for you
Crypto tax-loss harvesting is currently among the most powerful US tax techniques available — you can realize losses to offset gains and immediately reestablish the position. For HNW positions, year-end harvesting of underwater lots can offset realized gains dollar-for-dollar (up to $3K against ordinary income, unlimited against capital gains). Confirm with your CPA that this remains the law in your filing year.
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Educational content only. Not investment, tax, or legal advice.