The Loophole That Costs Billions
If you sell a stock at a loss and then buy the same stock back within 30 days, you do not get to claim that loss on your taxes. That is called the wash sale rule. In one version or another, this rule has existed since 1921. But the catch is that it only applies to securities, not to crypto.
Cryptocurrencies are classified as property under federal tax rules. That means investors can sell a crypto asset at a loss, immediately buy it back, and still write off that loss against their gains. Or against their regular income, up to $3,000 a year.
Troy Lewis, who is both a CPA and an accounting/tax professor at Brigham Young University, says the recent focus stems from a year-over-year decline. Since October 2025, bitcoin's value has dropped by roughly 50%, so many who purchased recently now hold positions they could use for tax deductions. Lewis put it bluntly: "There's this big hole, and people are going to drive a truck through it."
What the New Bill Would Do
In June 2026, Texas Republican Representative Jodey Arrington introduced the "Applying Existing Tax Anti-Abuse Rules to Digital Assets Act." The bill would close the gap by treating crypto transactions under wash sale rules, meaning if you sell crypto at a loss and buy it back within 30 days before or after the sale, you lose the tax deduction - same as stocks.
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Rep. Ron Estes of Kansas voiced his support during testimony before the House Ways and Means Committee. "Extending these [wash sale] rules to digital assets ensure they are not treated better or worse than similar financial assets and provides consistency and clarity for investors and traders," he said.
Colin Wilhelm, who oversees tax legislative affairs at Grant Thornton, said, "I think you do see some momentum around tax legislation in this area." A 2024 Treasury projection estimated that closing this loophole for digital assets would bring in nearly $24 billion over a decade.
The bill is one of six crypto tax reform bills the House committee is considering. Separately, the Senate is considering the Clarity Act, a wider regulatory bill that, among its provisions, would prohibit federal officials from issuing digital assets.
What This Means for Your Portfolio
Right now, none of this is law. According to observers, the House's crypto legislation package probably won't advance in the next few months as the midterm elections near. However, the hearings and bill introductions indicate that lawmakers are increasingly focused on these provisions going forward.
For those holding crypto at a loss, the legislative effort coincides with many investors who purchased in the last one to two years likely having unrealized losses, making them prime beneficiaries of the existing wash sale exemption.
For now, the loophole remains open. But Congress is paying attention, and the truck drivers Lewis mentioned might not have the road to themselves for much longer.
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