A stablecoin trading below its intended value, either briefly (USDC in March 2023) or permanently (Terra UST in 2022).
A depeg is not a loss until you dispose of the stablecoin. Selling during the dip realizes a loss against your basis, usually about $1 per unit; holding through a recovery realizes nothing. A permanent collapse supports a loss only on sale, swap, or documented worthlessness.
Only if you dispose of it. An unrealized drop, even to zero, is not deductible until you sell, swap, or establish worthlessness.
Source: IRC 1001; IRC 165
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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