Congress proposes new bill to end crypto tax loophole worth $23.5 billion

For years, crypto traders have enjoyed a tax perk that stock investors could only dream about. Buy Bitcoin, watch it drop, sell at a loss to offset your tax bill, then immediately buy it back. Rinse, repeat, save thousands. Congress is finally saying “enough.”

Rep. Jodey Arrington, a Texas Republican, introduced H.R. 9172 on June 8, 2026, officially titled the “Applying Existing Tax Anti-Abuse Rules to Digital Assets Act.” The bill would extend the Internal Revenue Code’s wash sale rules to cover digital assets, effectively killing one of the last major tax advantages unique to crypto.

What the wash sale loophole actually is

If you own stocks and sell at a loss, the IRS won’t let you claim that loss on your taxes if you buy the same stock back within 30 days. That’s the wash sale rule, and it’s been part of the tax code for decades.

Crypto, however, has existed in a regulatory gray zone. Digital assets weren’t classified the same way as securities, which meant the wash sale rule simply didn’t apply. A trader could sell Bitcoin on Monday at a loss, buy it back on Tuesday, and still write off the loss come tax season.

H.R. 9172 would slam that door shut. Under the proposed legislation, any loss claimed on a digital asset sale would be disallowed if a “substantially identical asset” is repurchased within a 30-day window, mirroring exactly how stocks and other traditional financial instruments are treated.

The $23.5 billion question

Prior Treasury Department estimates pegged the potential revenue from closing this loophole at roughly $23.5 billion over a decade.

A June 9, 2026 hearing before the House Ways and Means Committee reviewed H.R. 9172 alongside five other related bills targeting digital asset taxation. Among them is the bipartisan PARITY Act, which would align the tax treatment of digital assets with traditional stocks more broadly, touching on stablecoins, staking rewards, and mining income.

Attempts to close the wash sale loophole have surfaced repeatedly since at least 2021. Multiple Congresses have tried and failed to address the tax treatment of digital assets. The 2025-2026 legislative cycle has seen these proposals gain genuine traction, moving from think-tank talking points to formal committee hearings with bipartisan support.

Carve-outs, complications, and DeFi headaches

Some proposals under consideration include de minimis exemptions, which would shield small transactions from the new rules. There’s also discussion of lending safe harbors and potential carve-outs for regulated payment stablecoins.

The compliance picture gets messy fast, particularly for decentralized finance participants. A trader using multiple wallets across several DeFi protocols faces a fundamentally different tracking challenge than someone buying and selling through Coinbase. Identifying “substantially identical” assets in a world of wrapped tokens, liquidity pool positions, and cross-chain bridges is not a trivial exercise.

As of late July 2026, no final legislation has been passed. Multiple competing priorities remain in play, and the crypto industry’s lobbying apparatus is pushing back.

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