2022 paper losses and tax loss harvesting, also called a wash sale.

I’ve been talking with some people about cryptocurrency, the SEC, and the current market. I’m curious what this sub has to say on the topics.

Specifically what I think I see is massive paper losses generated by mining corporations and digital assets managers; selling off equipment, cashing in BTC holdings, repositioning and reinvesting. Showing huge losses, while still exceeding revenue expectations and meeting goals.

Looking deeper I had a guy pull up information on Wolters Kluwer. He found this:

https://www.wolterskluwer.com/en/expert-insights/application-of-wash-sale-and-constructive-sale-rules-to-cryptocurrency-and-digital-assets

“Cryptocurrency and Wash Sales Under current law, the wash sale rules applies only to stock or securities, as well as contracts or options to acquire or sell stock or securities. Cryptocurrency or virtual currency is classified as property by the IRS. Thus, it is not currently subject to the wash sale rule. An investor in a virtual currency could sell his or her position to recognize a loss for tax purposes even if he or she repurchases it within the 61-day period around the sale.

Proposed legislation would change this beginning in 2022. Under the proposal, the wash sale rule would apply to any digital representation of value (cryptocurrency or virtual currency), including contracts and options to acquire the virtual currency. Like wash sales or stock or securities, the taxpayer would add the loss denied to the basis of the newly acquired virtual currency.”

To my knowledge this “proposed legislation” is not passed, and when it does will have varying rules for crypto outside of BTC and ETH.