FBAR for Crypto: When and How to File
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FinCEN plans to require certain crypto investors who have traded on international exchanges to report their foreign holdings.
What is the FBAR?
The FBAR is designed to track foreign financial assets to prevent crimes like tax evasion. It requires any U.S. trader who held $10,000 or more in one or more foreign bank accounts during the tax year to report the balances of said accounts.
Although it has tax implications, the report itself is not made to the IRS, but instead to the U.S. Treasury Department through the Bank Secrecy Act's e-filing system.
Is a cryptocurrency FBAR required?
It's not clear whether an FBAR is part of reporting requirements for U.S. investors who have traded virtual currencies on internationally-based exchanges. This is because there's no definitive guidance that accounts on exchanges count as "international bank accounts."
However,  suggest this regulation will soon apply to accounts on foreign crypto exchanges as well. Thus, a conservative approach would be to file an FBAR if at any time you held $10,000 or more in one or more internationally-based accounts during the tax year
Note that this total is not for a single account, but for all foreign accounts. For example, if you held $5,000 of ETH on Bitfinex (Taiwan) and $6,500 of LTC on KuCoin (Hong Kong), you might need to file an FBAR for each account.
Do I need to report joint ownership on an FBAR for crypto?
Yes, if accounts are jointly owned, you need to report all owners. On the FBAR, there is a separate space for this information, so you do not need to provide additional reports.
How to file a crypto FBAR: 4 steps
1. Use crypto tax software to organize your transactions
If you’ve traded on multiple exchanges, it may be helpful to use crypto tax software to aggregate and organize all your accounts so you can determine if and what you need to report.
If you are using TokenTax and have access to our FBAR feature, you will receive a report that tells you what the highest balance you had in foreign accounts was during the last tax year.
If you are already a Basic or Premium user and need to purchase the FBAR add-on, you can do so at the checkout page. Be sure that you've uploaded all your crypto data, including deposits and withdrawals for all exchanges. You can then generate the FBAR form in your Documents page.
2. Fill out your personal information on FinCEN's e-filing site
Individuals can use the Bank Secrecy Act (BSA) e-filing system to report their FBAR.FBARs should be filed by the April 15 tax deadline or by the October 15 tax extension deadline.
If an investor fails to file by April 15, they'll be granted an automatic extension, so there’s no need to file for any kind of FBAR extension.
In Part I of the e-filing process, fill out your personal information.
3. Provide information about the foreign crypto exchanges you've used
In either Parts II or III, you will provide information about the foreign exchanges on which you hold cryptocurrency. If you are a single filer, then fill out Part II. If you are completing the FBAR for jointly held accounts where both individuals have signature authority, then use Part III.
If you need to report multiple exchanges you can create copies of the form by clicking the + box at the top of the form in Pt II or III.
4. Enter the account balance details for each exchange
For each exchange, here's how we fill typically fill out the FBAR for TokenTax customers:
On the top row of your TokenTax-generated FBAR report, you'll see the maximum account value. Enter this in the applicable field on the BSA e-filing site.
For "Type of account," select "Other" and then in the box to the right, type in "Cryptocurrency exchange."
For "Financial institution name," enter the name of the exchange.
For "Account number or other designation, " enter the email address used for the exchange login.
For the exchange's physical address, fill it out to the best of your ability. Some exchanges share their addresses, while others keep them secret for security reasons. At minimum, the exchange's country should be entered. You can find a list of popular foreign exchanges' countries below.
The final parts, IV and V, are typically left blank. Finally, add your signature to the document and submit.
Consult FinCEN’s instructions or a crypto tax accountant for more support on filing the FBAR.
What is the Form 8938?
The 8938 is similar to the FBAR; however, it is a form that is reported to the IRS on your tax returns, while the FBAR is filed with FinCEN. It also has different, much higher reporting thresholds, as set in the Foreign Account Tax Compliance Act (FATCA).
The FATCA thresholds are as follows for taxpayers living in the United States:
Single filers: foreign assets worth more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
Married filing jointly: foreign assets worth more than $100,000 on the last day of the tax year or more than 150,000 at any time during the tax year
Married filing separately: foreign assets more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
These thresholds are different for taxpayers living abroad. Read the IRS’s summary of FATCA reporting here for more information. Note that if you file a Form 8938, you still need to file an FBAR as well.
For more detailed information on the differences between the two forms, the IRS provides a table comparing Form 8938 and the FBAR.
Is a Form 8938 required for cryptocurrency?
The IRS has not given specific guidance regarding whether the FATCA applies to crypto held with foreign financial entities like cryptocurrency exchanges, but there’s no drawback to filing just in case. Thus, many are adhering to the FATCA requirement for digital assets in case later guidance requires crypto holders to file the 8938.
Which exchanges are not U.S. based?
You'll need to know which exchanges qualify as foreign financial institutions if you file an FBAR. Here is a list of common non-U.S. based exchanges.
Common foreign exchanges
Bithumb (South Korea)
BTC Markets (Australia)
Gate.io (Cayman Islands)
HitBTC (Hong Kong)
KuCoin (Hong Kong)
The Rock Trading (Italy)
Common U.S. exchanges that do not need to be included on the FBAR
Here is a list of the most common U.S. based exchanges. These do not need to be included on the FBAR.
Because DeFi exchanges are not registered in any country, it is unlikely that a U.S. trader would need to include them in FBAR or Form 8938 filing.
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Last reviewed by Zac McClure,MBA on September 8, 2022 · Sources