A wash sale is when you recognize a capital loss and then buy the same stock or security back within a 30-day window. Wash sales are not allowed for stocks and securities. The rule is designed to prevent traders from recognizing a capital loss and then buying back the same stock.
There is debate as to whether wash sales apply to cryptocurrency. Although it appears that the rationale for preventing wash sales would apply to cryptocurrency the same as it applies to stocks and securities, the IRS has not classified cryptocurrency as a stock or security. The IRS issued guidance that cryptocurrency is taxed as property. Accordingly, TaxBit does not apply the wash sale rules to crypto trades. (Further guidance from the IRS may ultimately expand the wash-sale rules to include cryptocurrency).