Realising Losses on Digital Asset Holdings in 2022

‍This piece was originally published in 2022 and updated in May 2026. It captures the digital asset loss-realisation landscape as it stood at that time. Some developments described here have since evolved. For current guidance, see our comprehensive Crypto Tax Loss Harvesting Guide.

It is an ideal time to start thinking about loss realisation. The final countdown has begun, and 31 December 2022 can be seen waiting on the horizon.

The rollercoaster of digital assets has seen more downs than ups, and luckily, the chapter is coming to a close, but with the down, everyone needs a helping hand, especially regarding your tax bill.

Loss realisation is the one loss you would not want to avoid. Showing you that every situation has a silver lining, especially when we’re this sensitive to “losing” this year.

What is loss realisation?

Short and straightforward, it is strategy. Loss realisation will help you minimize the amount you owe in taxes. This can be done at any time during the year. Still, clever investors usually wait until the end of the year to be able to assess their portfolio, and they can evaluate what effect their performance had on their taxes.

Two options to consider in managing your taxes

• The losses can be used to offset investment gains.

U.S. taxpayers can use up to $3,000 of their investment losses against their taxable income. Keep in mind the loss can also be carried forward to the next tax return.

Married individuals filing separately will have an amount of $1,500 each available to them to offset against their taxable income. Also note, the loss will only be realized for tax if it is sold.

Why not sell and repurchase it right away, then?

This would be called a wash sale; you must leave a 30-day window when you are dealing with securities. You cannot sell your investment and repurchase it immediately or the same type of security; you will need to leave 30 days before repurchasing your investment. Otherwise, your loss will not count for tax purposes.

However, digital assets are seen as property in the US and not as a security. Therefore, the above rule does not apply.

It is essential to evaluate your portfolio to ensure you have not purchased the same security and make a mental note not to rebuy it before the time period elapses. Luckily, this is not the case with digital assets as of the publication date.

need a strategy in today’s markets, & “loss realisation” can help you preserve your investment portfolio & reduce the cost of capital gains tax, but it needs to be done before 31 December, 2022.

In the words of Winston Churchill, “He who fails to plan is planning to fail”.

When you sell it?

With digital assets is important to note that when you say sell you mean any disposal can trigger a loss.

The following events can constitute as a disposal:

• The sale of digital assets for fiat currency
• Trading digital assets for digital assets
• Expenditure of digital assets on goods and services
• Gift