H.R. 9172 would end the tax perk letting crypto traders claim losses on sales and immediately repurchase the same assets. Treasury estimates the loophole costs $23.5 billion over a decade.
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For years, crypto traders have enjoyed a tax advantage that stock investors cannot touch. Sell Bitcoin at a loss, claim the deduction on your tax return, then buy it back the next day. Repeat as needed.
Congress is moving to close that door.
Rep. Jodey Arrington, a Texas Republican, introduced H.R. 9172 on June 8, the "Applying Existing Tax Anti-Abuse Rules to Digital Assets Act." The bill would extend the Internal Revenue Code's wash sale rules to digital assets, ending a tax strategy unique to crypto markets.
The wash sale rule has been part of the tax code for decades. If you sell a stock at a loss and buy the same stock back within 30 days, the IRS disallows the loss. Digital assets have existed outside that rule because the IRS never classified them as securities. A trader could sell Bitcoin on Monday at a loss, buy it back on Tuesday, and still write off the loss.
H.R. 9172 would change that. The bill defines a "substantially identical asset" and applies the 30-day window to all digital asset transactions. The Treasury Department previously estimated that closing the loophole would generate roughly $23.5 billion in additional tax revenue over a decade, according to projections cited in the hearing.
The House Ways and Means Committee reviewed the bill on June 9 alongside five other digital asset tax proposals, including the bipartisan PARITY Act, which would align the tax treatment of digital assets with traditional stocks more broadly. The PARITY Act covers stablecoins, staking rewards, and mining income. Some proposals under consideration include de minimis exemptions for small transactions and lending safe harbors for regulated payment stablecoins, the committee heard.
Compliance is a sticking point, particularly for decentralized finance participants. A trader using multiple wallets across several DeFi protocols faces a tracking challenge that someone buying and selling through Coinbase does not, the committee was told. Identifying "substantially identical" assets in a world of wrapped tokens, liquidity pool positions, and cross-chain bridges is not a trivial exercise.
Attempts to close the wash sale loophole have surfaced repeatedly since at least 2021. Previous Congresses tried and failed to address the tax treatment of digital assets. The 2025-2026 cycle has seen these proposals gain traction, moving from think-tank talking points to formal committee hearings with bipartisan support, according to people familiar with the process.
No final legislation has passed as of late July 2026. The bill remains in committee markup.
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