May 28, 2021
Last week the crypto markets plunged, with major cryptocurrencies losing over half their value when compared to their recent highs. But savvy investors could leverage those losses for tax benefits, due to the fact that cryptocurrencies aren’t subject to the SEC’s “wash sale rule,” as reported by CNBC.
The Wash Sale Rules
A “wash sale” occurs when an investor sells a security at a loss, then buys back the same security or a substantially similar one within 30 days, per the SEC website.
Although investors can usually deduct capital losses, that’s not allowed for losses related to wash sales. In fact, wash sales can even incur penalties.