A new proposal in the U.S. House of Representatives could take away a tax advantage crypto investors have used to offset gains. The bill, H.R. 9172, aims to bring digital assets under the same wash sale rules that apply to stocks and securities.
House Budget Chairman Jodey Arrington introduced the legislation on June 8. It has since been referred to the Ways and Means Committee, which handles tax policy. The bill is called the “Applying Existing Tax Anti-Abuse Rules to Digital Assets Act.”
What Would Change for Crypto Investors
Under current law, crypto is treated as property. That means wash sale rules, which prevent investors from claiming losses on stocks they quickly buy back, do not apply to digital assets. So investors can sell crypto at a loss, claim that loss on taxes, and then buy the same asset back almost immediately. This strategy is known as loss harvesting.
If passed, H.R. 9172 would change that. The bill would replace “stock or securities” in the wash sale statute with a new category called “specified assets.” That would include stocks, securities, and digital assets, with an exception for qualified U.S. dollar stablecoins. Investors would then have to wait 30 days before repurchasing a substantially identical digital asset to claim a loss.
Key Details and Exceptions
The bill also covers constructive sale rules. These rules apply when investors use certain transactions to lock in gains without selling and recognizing income. H.R. 9172 would extend those rules to digital assets, again excluding qualified stablecoins.
But there are exceptions. Digital assets received from staking, mining, or other validation activities would not be affected. Tokenized and wrapped assets could get special treatment. They might be considered substantially identical to the underlying asset if they create the same economic exposure.
The bill defines a “widely traded digital asset” as one traded on an exchange with a market value over $500 million in the past year. Investors and related parties can own no more than 10% of it. That threshold would adjust for inflation after 2027.
Political Reactions
Arrington said the bill closes loopholes that give crypto preferential tax treatment. He added that it provides certainty for taxpayers and supports digital asset innovation. Ways and Means Committee Chairman Jason Smith argued that bad actors have exploited a regulatory gap because wash sale rules predate digital assets.
The bill does not create a new tax rate for crypto. Wash sale changes would apply to dispositions after the bill’s introduction. Constructive sale changes would apply after that same date. Many in the crypto community are watching closely, as this could fundamentally change how digital asset traders manage their tax liabilities.
