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Crypto Law/Level II · Tax: the first trap/2.3 Records and reporting/Lesson 6

Foreign accounts: FBAR and FATCA

Two separate US reports on foreign financial accounts, how far each reaches crypto held offshore as of October 2026, and why the penalties are larger than the tax.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. US platforms or self-custody avoid FBAR scope questions; FinCEN Notice 2020-2 says a foreign account holding only virtual currency is not currently reportable, but any fiat balance in it can make it reportable.
  2. When foreign accounts exceed $10,000 in aggregate at any time, file the FBAR free through FinCEN’s BSA E-Filing System; it is due 15 April with an automatic extension to 15 October.
  3. Form 8938 applies only above $50,000 at year end or $75,000 at any time for a single US resident ($100,000 and $150,000 joint), higher abroad; Free File Fillable Forms includes it for tax year 2025.
  4. Missed filings from non-willful conduct can be cured through the IRS Streamlined procedures: a 5% penalty for US residents and none for those meeting the 330-day non-residency test; a non-willfulness certification is required.
  5. Bittner v. United States (2023) limits non-willful FBAR penalties to one per report, not per account, up to $10,000 inflation-adjusted; willful violations can reach the greater of $100,000 or 50% of the balance.

MaterialsFinCEN Notice 2020-2 on virtual currency and the FBAR, linked from FinCEN’s ‘Report Foreign Bank and Financial Accounts’ pageThe IRS Instructions for Form 8938, Statement of Specified Foreign Financial AssetsYear-end and highest-balance statements from any exchange or platform based outside the United States

Wonder

  1. Does an account at a foreign crypto exchange have to go on an FBAR?
  2. Are the FBAR and Form 8938 the same thing?
  3. How large can the penalties be for missing one?

Explore

  1. US persons, meaning citizens, residents and US entities, can owe two different reports about money held abroad. The FBAR, FinCEN Form 114, comes from the Bank Secrecy Act and is filed with the Financial Crimes Enforcement Network (FinCEN), not with the tax return. It is required when a US person has a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the calendar year. It is due 15 April, with an automatic extension to 15 October, and is filed electronically through FinCEN’s BSA E-Filing System. Account records must be kept for five years.
  2. Crypto is an open question for the FBAR. In FinCEN Notice 2020-2, issued on 31 December 2020, FinCEN said the regulations do not define a foreign account holding virtual currency as a reportable account, so such an account is not reportable unless it also holds other reportable assets. FinCEN added that it intends to propose amending 31 CFR 1010.350 to include virtual currency. As of October 2026 the regulation’s text still does not mention virtual currency. A foreign platform account that also holds dollars or another fiat currency can still be reportable because of that cash, which is a common trap.
  3. FATCA, the Foreign Account Tax Compliance Act of 2010, added a separate tax-return form. Under 26 U.S.C. §6038D, individuals with specified foreign financial assets above a threshold attach Form 8938 to their income tax return. For an unmarried taxpayer living in the United States, the threshold is more than $50,000 on the last day of the year or more than $75,000 at any time during it; for married couples filing jointly it is $100,000 and $150,000. Taxpayers living abroad have higher thresholds, starting at $200,000 and $300,000. The two reports overlap but neither replaces the other.
  4. Whether crypto held through a foreign platform is a specified foreign financial asset is not settled by published guidance. The current Form 8938 instructions, revised in November 2021, do not mention digital assets, virtual currency or crypto at all. Self-custody wallets are a different case again: the FBAR rules are built around accounts with financial institutions located abroad, and FinCEN has not said that a wallet whose keys the owner holds is such an account. The scope of the reports depends on the platform’s location and structure, which is a question of fact.
  5. Penalties are the reason these forms matter. Under 31 U.S.C. §5321, a non-willful FBAR violation carries a civil penalty of up to $10,000, adjusted for inflation; a willful one, up to the greater of $100,000 or 50% of the account balance. In Bittner v. United States, decided on 28 February 2023, the Supreme Court held that the non-willful maximum applies per report, not per account, rejecting the government’s per-account calculation of $2.72 million for 272 accounts. For Form 8938, failure to file carries a $10,000 penalty, plus up to $50,000 more if the failure continues after an IRS notice, and a 40% penalty on underpayments tied to undisclosed assets.
  6. A practical check: list every platform where you hold or held crypto or cash, note where each company is based, and record the highest balance during the year for each account, including any fiat balance. Then compare the totals with the $10,000 FBAR test and the Form 8938 thresholds. This lesson explains the reports; it does not advise on where to hold assets or whether a particular account is reportable. The reach of these rules is also growing internationally through the OECD’s Crypto-Asset Reporting Framework (lesson 7.2.7). A qualified adviser can review unclear cases, especially for past years.

Key facts

  • An FBAR (FinCEN Form 114) is required when a US person’s foreign financial accounts exceed $10,000 in aggregate at any time during the calendar year.
  • The FBAR is due 15 April with an automatic extension to 15 October and is filed with FinCEN, not with the tax return.
  • FinCEN Notice 2020-2 said a foreign account holding only virtual currency is not currently reportable on the FBAR, and that FinCEN intends to propose changing that.
  • For an unmarried US resident, Form 8938 is required when specified foreign financial assets exceed $50,000 at year end or $75,000 at any time during the year.
  • In Bittner v. United States (2023), the Supreme Court held that the non-willful FBAR penalty maximum applies per report, not per account.
  • Under 31 U.S.C. §5321, the willful FBAR penalty can reach the greater of $100,000 or 50% of the account balance.

Exercise nine, six, three, one

9CollectList up to 9 places where you or a realistic example holder keeps crypto or cash, such as a US exchange, a foreign exchange, a foreign bank, a hardware wallet or a mobile wallet app.
6ClusterSort them into 6 categories: US-based accounts, foreign accounts holding fiat, foreign accounts holding only crypto, self-custody wallets, accounts you have signature authority over but do not own, and places whose location you are unsure about.
3DistillReduce the 6 categories to 3 groups: clearly within the FBAR or Form 8938 rules, clearly outside them, and unsettled under current guidance.
1CrystallizeWrite 1 sentence explaining, in your own words, why a foreign crypto account that also holds dollars can fall under the FBAR even though crypto alone does not.

Fact check

Dates, figures and claims checked against the published sources listed below.

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