This article is part of TokenTax's Cryptocurrency Tax Guide.
What is the FBAR for cryptocurrency?
The FBAR is the Foreign Bank Account Report. FinCEN (the Financial Crimes Enforcement Network) created it in order to track foreign financial assets to prevent crimes like tax evasion.
If you are in the U.S., then you may need to file one if you ever exceed a total of USD 10,000 at any time held in foreign cryptocurrency exchange accounts at any time of the calendar year.
In order to fill out the FBAR report, you will need to know the highest account balances that your crypto holdings reached in each non-U.S. exchange during the tax year, in USD equivalent value. Software can be used to calculate your crypto tax and your account balances for the FBAR.
Specific FBAR filing requirements
You are required to file a separate FinCEN Form 114 for each of your foreign financial institution accounts even if only one of them is over USD 10,000. For example, if you held USD 8,000 worth of crypto on Bibox and USD 3,000 on Bitmex for one day last year (totalling USD 11,000), you conservatively should report all of the foreign accounts you opened during the year.
Given that the regulators have worded the foreign account requirements vaguely, it is best to interpret the rules conservatively to avoid FBAR penalties. For very severe cases, there can even be criminal penalties, so it is best to err on the side of caution.
Do I need to include all exchanges where my assets went over $10,000 USD during the year?
If your total foreign assets amount across all foreign exchanges goes over $10,000, then you need to include all foreign exchanges on your FBAR, even if they didn’t all breach the $10k threshold individually. Keep in mind that the FBAR only needs to be filed for foreign exchanges, not exchanges based in the United States.
Do I need to report joint ownership interest in or signature authority?
If the accounts are jointly owned, you need to report all ownership. There is a separate space where you can disclose this information on the form, so you do not need to provide additional reports. Our separate guide on filing the FBAR <include link to near report> includes where to report joint account ownership.
I've heard that FinCEN may have said that the FBAR is not required for crypto. Is this true?
A recent Forbes article has stated that FinCEN said that the FBAR is not required for crypto. However, the article's source of this information is via "a request for guidance from an accountants' group." There's no information about what this accountants' group is or what the email exchange was, nor any official confirmation from FinCEN.
To take the most conservative approach, it's best to file the FBAR anyways and to only fully assume the FBAR is not required for crypto once FinCEN releases official guidance. This likely pertains to you if you are filing Expat taxes as well.
Also keep in mind that there could be situations where you could have held over $10k in fiat on a foreign exchange, even if briefly, thus making you applicable for FBAR rules even if they end up not applying to crypto. For example, you can trade to USD on Bitfinex even though it is a foreign exchange.
Is it difficult to file the FBAR form for crypto?
The process may seem daunting, but ultimately it’s not that difficult to electronically file the FBAR via their BSA E-filing system. For our full filing clients, we handle the full FBAR filing with FinCEN for them. Read our FBAR filing guide for specific instructions that guide you every step of the way for filing a crypto FBAR.
What is the Form 8938?
The 8938 is similar to the FBAR in that you report balances of your foreign financial assets, but they are separate forms with different thresholds, and you report the 8938 on your tax return for the IRS while the FBAR is e-filed separately with FinCEN.
You may want to file a crypto 8938 if you have significant values of crypto held on foreign exchanges. The thresholds for 8938 reporting are much higher than that of the FBAR, however.
When you need to file IRS Form 8938 for 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 which the threshold is over $10,000 in foreign assets. An important distinction is that the FATCA 8938 is included with your income tax return, while the FBAR is a separate filing with FinCEN and is thus not part of your tax return.
You are required to determine the value of your foreign assets to figure out the threshold and to report your amounts . Our FBAR report can provide you with these values for the FATCA. For our full filing clients, we handle the filing of the 8938 if applicable.
For more detailed information on the differences between the two forms, the IRS provides a table comparing Form 8938 and the FBAR.
Is the Form 8938 really required for crypto?
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 crypto in case it’s later said that crypto holders are required to file the 8938.
Other common FBAR questions
Do I file with the report that TokenTax gives me?
Our own report is not the one you file with FinCEN, rather, it is a document that tells you the highest USD value per exchange, which is the information you’ll need to complete the FBAR. We don’t generate pre-filled FBARs because the documents require non-crypto personal information.
Which of my exchanges are non-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.
Note that wallets and decentralized exchanges are generally not reported on the FBAR, as it’s not an account on a foreign exchange but rather a wallet you control.
Common foreign exchanges
Bithumb (South Korea)
BTC Markets (Australia)
Cryptopia (New Zealand)
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, so that you know that these do not need to be included on the FBAR.