As cryptocurrencies are quite new, many jurisdictions have not yet implemented thorough laws regarding the trading of cryptocurrencies (and other blockchain implementations such as NFTs).
In the United States, there are currently no wash sale rules on cryptocurrencies (as of March 2022). For other securities, such as stocks, the wash sale rule is used to prevent tax payers from selling securities at a loss to quickly benefit from the ability to claim these losses as tax deductions.
As defined on Investopedia:
A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
Interestingly, the US government has not defined any wash sale rules for crypto. Thus, before the end of a tax year, tax payers can deliberately sell any crypto holdings that have unrealized losses, then immediately repurchase those holdings, and claim the losses in their taxes.
<aside> 💡 Since there is no wash sale rule for crypto in the US, investors can sell crypto holdings, that have unrealized losses, and immediately repurchase them; the losses can then be used for tax deductions
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One should note that selling and buying the same crypto type and amount can result in a slight loss due to maker/taker/transactional fees from the crypto exchange/broker; however, in many cases, this loss in fees can be considered insignificant to the amount of tax losses claimed from the process.
As a consequence, investors who wish to constantly buy and sell crypto do not have to worry about wash sales in general, regardless of their intentions for claiming losses etc.
As of March 2022, there is currently no day trading rules when it comes to trading cryptocurrencies as they are not regulated by FINRA or the SEC.
<aside> 💡 There are no day trading rules for cryptocurrencies
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When trading securities, investors are typically charged with long-term or short-term capital gains tax. Long-term capital gains tax applies for securities that were held for at least one calendar year and ranges from 0-20% based on income. Short-term capital gains tax applies for securities held less than a calendar year and can range from 10-37% (usually greater than long-term).
Although the IRS has not explicitly defined NFTs (as of March 2022), NFTs may sometimes be classified as art or collectibles. Art and collectibles are considered an exception when it comes to long-term capital gains as the collectibles (stamps, antiques, or trading cards) and are charged with a special flat-rate long-term capital gains tax of 28%, much higher than the typical long-term capital gains rate for securities.
<aside> ⚠️ NFTs may have greater long-term capital gains taxes as they are sometimes classified as collectibles/art, which are charged a flat rate capital gains tax of 28%
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