For years, crypto traders operated with a tax superpower that stock investors envied: no wash-sale rule. Sell Bitcoin at a loss, buy it back ten minutes later, and the IRS let you book the deduction. Congress is closing that gap. Pending legislation — and Treasury guidance telegraphing its direction — would extend the existing wash-sale statute (IRC Section 1091) to digital assets, treating Bitcoin, Ethereum, and their kin the same way equity securities are treated. The mechanism is straightforward: once the rule applies, harvesting a crypto loss requires staying out of the asset for 30 days. That forces a decision every time an investor wants to lock in a loss — sell and wait, or sell and rotate into a correlated substitute. Either move is a taxable event and, critically, a transaction.
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