House bill would extend wash-sale rules to crypto

House Republicans introduced H.R. 9172, the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act, on June 8. The bill, sponsored by House Budget Chairman Jodey Arrington (R-Texas), was referred to the House Ways and Means Committee.

The measure would change the wash sale rule by replacing the phrase “stock or securities” with “specified assets.” That category would explicitly include many digital assets while excluding qualified U.S. dollar stablecoins. Under the proposal, a loss on a covered digital asset could be disallowed if the taxpayer acquires a substantially identical position within 30 days before or after the sale.

H.R. 9172 would also extend certain short-sale, futures and constructive sale rules to digital assets. Constructive sale rules apply when transactions effectively lock in gains without an actual sale; the bill would treat comparable digital-asset transactions as taxable, with the same exclusion for qualified U.S. dollar stablecoins.

The bill creates a definition for a “widely traded digital asset.” The asset must have had a market value above $500 million in the prior year and the taxpayer and related parties must own no more than 10% of the asset. That $500 million threshold would be adjusted for inflation after 2027.

Carve-outs would exclude qualified U.S. dollar stablecoins and digital assets received through validation activities such as staking and mining. The text also covers tokenized and wrapped assets, allowing certain tokenized or wrapped versions to be treated as substantially identical to an economically equivalent stock, security or digital asset.

The Internal Revenue Service currently treats digital assets as property, which leaves many crypto trades outside the wash sale rules written for securities. H.R. 9172 does not change tax rates; it alters how existing anti-abuse rules apply. The bill says wash sale changes apply to dispositions after its introduction and constructive sale provisions apply to transactions after that date.

In a June 17 press release, Arrington described the bill as closing a tax-code gap that gives digital assets different treatment from other investments. He added: “My Applying Existing Tax Anti-Abuse Rules to Digital Assets Act closes these loopholes by applying the same commonsense safeguards that already apply to similar traditional financial assets, providing greater certainty for taxpayers and supporting the continued growth of America’s digital asset economy.”

House Ways and Means Chairman Jason Smith argued lawmakers want to stop tax avoidance by shifting positions into digital formats. He added: “Bad actors should not be able to game the system and evade longstanding anti-abuse rules by moving from traditional financial assets to digital assets.” The bill is one of eight digital-asset tax proposals under review by House tax lawmakers and awaits consideration by the Ways and Means Committee.