A new House proposal could strip cryptocurrency investors of a key tax advantage by extending traditional wash-sale rules to digital assets, closing a loophole that has allowed traders to harvest losses and immediately repurchase tokens.
In June 2026, the House Ways and Means Committee unveiled a six-bill package aimed at creating the first comprehensive framework for digital asset taxation in United States history.
Among the proposals is H.R. 9172, a legislation that would apply wash-sale rules—long enforced in equity markets—to cryptocurrencies.
Under current law, stock investors cannot sell shares at a loss and repurchase them immediately to claim a tax deduction. Crypto investors, however, have been able to do exactly that, exploiting a gap in the tax code.
The new bill seeks to eliminate this disparity by treating digital assets like traditional financial instruments.
Other measures in the package include clarifying tax treatment for staking and mining rewards, exempting small network fees from capital gains reporting, and streamlining paperwork requirements for everyday crypto transactions.
Lawmakers argue that these reforms will reduce administrative burdens while ensuring parity between digital assets and traditional investments.
Current Tax Privilege and Liability of Crypto Investors
At present, the Internal Revenue Service (IRS) treats cryptocurrency as property, not currency.
This means every transaction—whether buying coffee with Bitcoin or swapping tokens on a decentralized exchange—requires a separate capital gains entry.
Short-term gains are taxed at ordinary income rates of up to 37%, while long-term gains enjoy lower rates of 0%, 15%, or 20%, depending on income.
The loophole lies in the absence of wash-sale rules.
Investors can sell assets at a loss during downturns, immediately repurchase them, and still claim the deduction. This practice, known as tax-loss harvesting, has been widely used to offset gains elsewhere in a portfolio.
For many crypto traders, it has been one of the few clear tax advantages in an otherwise burdensome reporting system
What the Proposed Bill Brings
If enacted, the bill would close the wash-sale loophole, preventing investors from instantly repurchasing tokens after selling at a loss. This change would align crypto taxation with equities, eliminating a strategy that has saved traders billions during volatile market swings.
Additionally, the legislation would simplify reporting by exempting small network fees and regulated stablecoin transactions from capital gains calculations.
It would also provide clarity on staking and mining rewards, deferring taxation until assets are sold rather than when they are generated.
Together, these changes represent both a tightening of tax advantages and a streamlining of compliance.
Investors, on the other hand, having the loss of the wash-sale loophole will reduce opportunities for aggressive tax-loss harvesting.
This could increase effective tax liabilities, particularly for active traders who rely on short-term strategies. Long-term holders may be less affected, as favorable capital gains rates remain intact.
For crypto platforms, the legislation introduces new compliance obligations.
Exchanges and brokers will need to implement systems to track wash-sale violations, report staking rewards, and manage exemptions for stablecoin transactions.
While this may increase operational costs, it also provides long-awaited clarity that could attract institutional investors wary of regulatory ambiguity.
Digital Assets under the Spotlight
Lawmakers argue that the current system is unsustainable.
With more than 60 million Americans owning cryptocurrency, the absence of clear tax rules has created confusion, inefficiency, and opportunities for exploitation. By extending wash-sale rules to digital assets, Congress aims to ensure fairness between traditional and digital markets, reduce loopholes, and modernize the tax code for the digital asset economy.
he broader motivation is to position the United States as a leader in digital finance. Other countries, including the U.K. and Singapore, have already implemented comprehensive tax frameworks for crypto. Without reform, U.S. competitiveness could erode.
The House proposal reflects a recognition that digital assets are no longer fringe instruments but central to global capital markets.
