Crypto Tax Loss Harvesting
A tax strategy where investors sell crypto at a loss to realize a capital loss that may offset taxable gains, subject to local rules.
Crypto tax loss harvesting is the practice of selling a cryptocurrency that has fallen below its purchase price so the loss becomes a realized capital loss for tax purposes. That loss may be used to offset capital gains from other crypto trades, stocks, or other investments, and in some places may also offset a limited amount of ordinary income or carry forward to future years. The exact treatment depends on the taxpayer’s country, holding period, and reporting rules.
For example, if someone bought ETH for $3,000 and later sold it for $2,000, the $1,000 realized loss could potentially reduce taxable gains from selling BTC at a profit. Some investors may buy back the same or a similar asset to maintain market exposure, but rules around wash sales, timing, and related-party transactions vary by jurisdiction. Because crypto tax reporting can be complex, accurate records of purchase dates, cost basis, sale proceeds, fees, and wallet or exchange activity are important.
Other terms in Regulation & Tax
AML
Anti-money laundering rules and processes aim to stop criminals from using financial systems, including crypto platforms, to hide or move illicit funds.
BitLicense
A state license required for many virtual currency businesses that serve customers in New York.
CARF
CARF is an OECD framework for tax reporting and automatic exchange of information about crypto-asset transactions.
FATF
The Financial Action Task Force is a global standard-setter for anti-money-laundering and counter-terrorist-financing rules.