Updated July 29, 2026. Quick answer: The answer is in the section’s own scope. IRC §1091 is headed “Loss from wash sales of stock or securities”, and subsection (a) disallows a loss “claimed to have been sustained from any sale or other disposition of shares of stock or securities”. A digital asset is treated as property, and property is not shares of stock or securities. So the disallowance does not reach it — the one place a crypto holder is treated better than a stockholder.
The scope language, which is the whole argument
The section is titled “Loss from wash sales of stock or securities”. Subsection (a), “Disallowance of loss deduction”, applies “In the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities” where substantially identical property is acquired within the statutory window. Every operative noun in that phrase is a securities noun.
Digital assets are treated as property for federal tax purposes rather than as stock or securities — the position the IRS took in Notice 2014-21 and has applied since. Property that is not stock or securities falls outside §1091’s subject matter, so the same-day repurchase that would disallow a stock loss does not disallow a crypto one.
| Stock | Crypto | |
|---|---|---|
| Sell at a loss, rebuy immediately | Loss disallowed under §1091 | Not reached by §1091 |
| Is the loss still a capital loss? | Yes | Yes |
| Capped against ordinary income? | Both — §1211(b) allows the lower of $3,000, or $1,500 for a married individual filing separately, above net gains | |
| Long-term treatment | Both turn on the more-than-one-year holding period in §1222 | |
Two limits that make this smaller than it sounds. First, §1211(b) caps what a net capital loss does for you: above your gains, only the lower of $3,000 — or $1,500 for a married individual filing separately — offsets ordinary income in a year, with the rest carried forward. Harvesting freely does not mean deducting freely. Second, this page describes the scope of one section as it currently reads. §1091’s scope is a legislative choice, not a principle, and proposals to extend it to digital assets have circulated repeatedly. A strategy resting on the absence of a rule is only as durable as the absence.
Where the advantage actually is
Against a realised gain, the ability to sell a losing position and re-establish it immediately is a real difference from stock — you keep the exposure and bank the loss against the gain, without the thirty-one-day gap a stockholder has to sit through. That is the whole benefit, and it is a timing benefit rather than a rate one. If the gain you are offsetting came from a swap rather than a sale, note that the swap itself was already a taxable disposition.
Nothing here addresses staking, mining, airdrops, lending or broker reporting, and it states no exchange’s practice. It is a statement about which losses one Code section disallows.
Run your own numbers. Capital-loss harvest helper — net the gains and losses.
Sources
IRC §1091, including its section heading and subsection (a); IRC §1211(b); IRC §1222(3) and (4); IRS Notice 2014-21 for the proposition that digital assets are treated as property. Fetched July 2026.
This states what the cited authority says. It is not tax advice. It does not address staking, mining, airdrops, lending, or broker reporting, and it states no exchange’s practice — only what two Code sections reach and do not reach.