The IRS treats cryptocurrency differently than it treats traditional stocks and securities. This differentiation can impact taxpayers during a wash sale.

The agency considers crypto as property, not as a security (like a stock or bond); thus, it escapes wash-sale rules under present law.  CAUTION: The proposed and stalled Build Back Better Act included a provision that would subject cryptocurrency transactions to the wash sale rules. So there may be a change in the future.

California conforms to the federal wash sale rules.