Bitcoin Wash Sale Rule 2026: What Changes?

Legal Disclaimer: This article is provided for general informational and educational purposes only and does not constitute legal, tax, financial, or other professional advice. Tax laws and regulations can change, and their application depends on your individual circumstances. The Bitcoin Act does not provide legal or tax advice through this publication. Consult a qualified attorney or tax professional regarding your specific situation before making decisions based on the information in this article.

Not under current federal law for ordinary spot Bitcoin.

The wash sale rule is found in 26 U.S.C. §1091. It currently applies when a taxpayer sells stock or securities at a loss and acquires substantially identical stock or securities within the statutory period beginning 30 days before and ending 30 days after the sale.

The problem for applying that rule to Bitcoin is the statute's scope.

The IRS has treated Bitcoin as property for federal income tax purposes since Notice 2014 21, issued March 25, 2014. The IRS's current digital asset guidance continues to state that digital assets are treated as property and that the general tax rules for property transactions apply.

As a result, the existing §1091 wash sale rule does not currently cover an ordinary sale of spot Bitcoin simply because the Bitcoin was sold at a loss and then repurchased.

That is the current rule.

It is not necessarily the rule Congress intends to keep.

The answer is found in the text of the statute.

Section 1091 currently refers to losses from sales of stock or securities and the acquisition of substantially identical stock or securities.

Bitcoin is treated by the IRS as property rather than as stock or a security for federal income tax purposes. Notice 2014 21 established the property treatment, and current IRS guidance continues to apply property tax principles to Bitcoin.

That does not mean every asset connected to Bitcoin falls outside §1091.

For example, a security can be connected to Bitcoin without being Bitcoin itself. Bitcoin ETFs and other securities are governed by the tax rules applicable to securities.

The IRS's 2026 Form 1099 DA instructions also expressly address wash sale reporting for tokenized securities that are treated as stock or securities under §1091.

The legal distinction is therefore important:

Spot Bitcoin and a security providing Bitcoin exposure are not automatically the same thing for tax purposes.

H.R. 10357 is the Digital Asset Tax Certainty Act.

The House Ways and Means Committee approved the legislation, as amended, on September 16, 2026, by a 38 to 5 vote and ordered it favorably reported to the House of Representatives.

The legislation is broader than wash sales. It addresses digital asset transaction fees, accounting methods, stablecoins, lending, dealers and traders, charitable contributions, mining and staking, broker reporting and other tax rules.

But Section 301 is the provision Bitcoin holders need to watch for the wash sale question.

The bill would amend §1091 so that its scope extends beyond stock and securities to a new category called specified assets.

Under the proposed language, specified assets would include stock or securities and traded digital assets other than qualified U.S. dollar stablecoins.

If that language became law, ordinary traded Bitcoin could fall within the federal wash sale regime.

The proposed legislation would extend the wash sale rule to traded digital assets, subject to the definitions and exclusions in the bill.

Section 301 would amend §1091 by replacing references to “stock or securities” with “specified assets.” The proposed definition of specified asset includes a “traded digital asset” other than a qualified U.S. dollar stablecoin.

The proposed rule would also retain the basic 30 day structure of §1091.

For a Bitcoin holder, that means the familiar strategy of selling Bitcoin at a loss and immediately repurchasing Bitcoin could become subject to a wash sale limitation if the legislation were enacted in its current relevant form.

But there is an essential legal qualifier:

H.R. 10357 has passed the Ways and Means Committee. It has not become law.

A committee vote does not itself amend the Internal Revenue Code.

The bill does not simply say “everything digital.”

Section 601 provides the definitions used throughout the legislation, while Section 301 specifically refers to traded digital assets and excludes qualified U.S. dollar stablecoins from the proposed wash sale definition.

The precise application to particular assets would therefore depend on the statutory definitions and, where authorized, Treasury regulations.

For Bitcoin, the important point is that the bill is specifically designed to bring qualifying traded digital assets into rules that currently apply to securities.

The proposed §1091 language excludes qualified U.S. dollar stablecoins from the definition of specified asset for purposes of the wash sale expansion.

The legislation also contains special rules for tokenized and wrapped digital assets.

A tokenized digital asset could be treated as substantially identical to economically equivalent stock, securities or traded digital assets under the proposed language.

This is one reason the exact statutory definitions matter more than a simple headline saying “crypto gets a wash sale rule.”

This is where the current bill becomes particularly significant.

Section 301(e) of the House amendment states that the wash sale amendments would apply to dispositions after September 14, 2026.

That date is part of proposed legislation, not current law.

If Congress enacted materially different language, the effective date could change.

Until legislation is enacted, taxpayers should distinguish between the proposed effective date and the law actually in force.

Under the current federal wash sale rules, an ordinary spot Bitcoin transaction is not subject to §1091 merely because you repurchase Bitcoin within 30 days.

That is why Bitcoin tax loss harvesting has historically differed from stock tax loss harvesting.

A taxpayer who owns Bitcoin with an unrealized loss can have a taxable disposition by selling it. The resulting capital loss is governed by the ordinary capital loss rules. The IRS confirms that selling digital assets for U.S. dollars produces a capital gain or loss, subject to the applicable limitations.

The absence of a current §1091 restriction means that a subsequent Bitcoin purchase is not automatically treated as a wash sale solely because it occurs within the 30 day period.

That could change if the proposed legislation becomes law.

Tax loss harvesting means realizing a loss by disposing of an asset whose value has fallen below its tax basis.

For example, suppose a Bitcoiner bought Bitcoin for $100,000 and later sells it for $70,000.

The sale can produce a $30,000 capital loss, subject to the applicable federal tax rules.

Under the current treatment of ordinary spot Bitcoin, repurchasing Bitcoin shortly afterward does not automatically trigger §1091 because Bitcoin is not currently within the statute's stock or securities language.

If the proposed H.R. 10357 language became law, that same immediate repurchase could fall within the wash sale rules.

The difference is substantial.

Under a wash sale rule, the taxpayer does not simply lose the economic value of the loss. The tax law generally disallows the loss for the relevant year and adjusts the basis of the replacement property under the applicable rules.

That changes the timing of the tax benefit.

The Bitcoin position itself could remain economically similar while the tax treatment of the realized loss changes.

Securities can be subject to the wash sale rule even when they provide Bitcoin exposure.

The critical question is what the taxpayer actually owns.

IRC §1091 applies to stock and securities. The IRS's current Schedule D instructions state that wash sale rules generally apply to transactions involving digital assets that are also stock or securities for tax purposes, including tokenized securities.

The IRS's 2026 Form 1099 DA instructions likewise contain wash sale reporting rules for tokenized securities treated as stock or securities under §1091.

Therefore, saying “the Bitcoin wash sale rule does not apply” is incomplete if the taxpayer is actually holding a security rather than spot Bitcoin.

The asset's legal and tax classification matters.

Self custody does not itself determine whether §1091 applies.

Self custody means that you control the private keys associated with your Bitcoin rather than relying on a custodian to hold the keys for you.

The current wash sale question turns on the asset and the applicable tax rule, not simply on whether an exchange or hardware wallet holds the keys.

Self custody does, however, create a separate recordkeeping issue.

The IRS says that taxpayers must report relevant digital asset transactions and maintain records sufficient to establish their tax positions. Its current guidance also states that transferring digital assets from one wallet, account or address belonging to you to another that also belongs to you is generally a non taxable event, except for digital assets used or withheld to pay transaction fees.

So moving Bitcoin into self custody does not make an eventual taxable sale disappear.

It also does not, by itself, make an ordinary Bitcoin sale subject to §1091 under current law.

The basic difference would be straightforward.

Current law: §1091 applies to stock and securities. Ordinary spot Bitcoin is not currently within that rule.

Proposed H.R. 10357: §1091 would be expanded to specified assets, including traded digital assets other than qualified U.S. dollar stablecoins.

That would bring qualifying traded Bitcoin transactions into the wash sale framework described in §1091.

The proposed legislation also contains a transition rule for broker reporting before January 1, 2028. That provision addresses how customer basis may be determined for certain digital asset dispositions during the transition period.

The legislation therefore goes beyond simply adding the word “Bitcoin” to an existing rule.

It would change the statutory framework around digital asset losses, reporting and related transactions.

The House text uses September 14, 2026 as the proposed effective date for the wash sale amendments.

That date is two days before the Ways and Means Committee approved the bill.

The distinction matters because a headline can easily create the false impression that Bitcoin wash sales became illegal on September 14.

They did not.

The bill is legislation moving through Congress. The committee approved it on September 16, but the current federal tax law has not been replaced by the committee vote.

Until an enacted statute changes §1091, the existing statutory rule remains the starting point for determining federal wash sale treatment.

There are four separate questions to monitor.

First, whether H.R. 10357 reaches the House floor.

The Ways and Means Committee has ordered the bill favorably reported to the House.

Second, whether the House changes the language.

The committee considered and adopted an amendment in the nature of a substitute before approving the bill. The text currently available from the House is therefore more important than earlier drafts.

Third, what the Senate does.

Even if the House ultimately passes the legislation, the Senate process would still matter before any corresponding provision could become federal law.

Fourth, the final effective date.

The current House text proposes application to dispositions after September 14, 2026, but that is not a current legal requirement. The final enacted text controls.

For anyone relying on Bitcoin tax loss harvesting, that distinction is not academic.

Not under the current federal wash sale statute for ordinary spot Bitcoin. IRC §1091 currently covers stock and securities, while the IRS treats Bitcoin as property. H.R. 10357 would change this if enacted, but it is not currently law.

Under current federal law, the §1091 wash sale rule does not automatically disallow the loss merely because ordinary spot Bitcoin is repurchased within 30 days. That treatment could change if Congress enacts legislation extending §1091 to traded digital assets.

H.R. 10357 is the Digital Asset Tax Certainty Act. The House Ways and Means Committee approved the bill, as amended, by a 38 to 5 vote on September 16, 2026. Section 301 would extend the wash sale rules to traded digital assets other than qualified U.S. dollar stablecoins.

The current House text says the wash sale amendments would apply to dispositions after September 14, 2026. That date belongs to the proposed legislation. It does not mean the rule is currently in effect.

A Bitcoin ETF is a security, not simply spot Bitcoin held directly. The existing wash sale rules can therefore apply according to the normal rules governing securities. The IRS also expressly addresses tokenized securities that fall within §1091.

The Bitcoin wash sale rule has not changed yet.

As of September 18, 2026, ordinary spot Bitcoin remains outside the federal wash sale rule in IRC §1091. But that could change if Congress enacts H.R. 10357 or substantially similar legislation.

The House Ways and Means Committee has already approved a bill that would extend §1091 to traded digital assets, with a proposed effective date of September 14, 2026.

For now, the distinction is simple:

Current law is not the same thing as proposed law.

Watch the statute, not the headline.