Do You Report Crypto on the FBAR or Form 8938?

The Current Rule: Crypto Alone Stays Off the FBAR

The FBAR (the yearly report of foreign financial accounts, filed once they top $10,000 combined) runs on a list of reportable account types, and cryptocurrency is not yet on the list. FinCEN, the agency that runs the FBAR, said so directly in a notice at the end of 2020. A foreign account holding only virtual currency is not a reportable account under the current regulation. That is the whole rule, and for a US person whose foreign crypto sits in a purely crypto account, it means no FBAR duty for that account today.

Now the caution, and it matters more than the rule. In the same notice, FinCEN announced that it intends to amend the regulation to make virtual currency reportable. More than five years have passed and no proposed rule has ever been published, so the change has sat dormant. But the stated intent has never been withdrawn, and these dollar-and-scope rules are the kind that change in a January with little warning; the IRS deleted an entire FBAR fix-it program from its website this month with no announcement at all. So the honest framing is that crypto-only accounts sit inside a window, not under a permanent exemption. We treat the window as open but plan as if it will close.

The Mixed-Account Trap That Pulls Crypto In

The exception for crypto-only accounts is exactly as narrow as it sounds, and this is where most real accounts fall out of it. FinCEN's notice carves out any foreign account that holds reportable assets besides the crypto. In practice that means the moment your exchange account also holds regular money, a shekel balance from a sale, euros waiting to buy in, dollars you deposited to trade, the entire account becomes reportable.

And you do not report just the cash sliver. Under the FBAR's valuation rule, you report the account's greatest value during the year, counting the currency and the non-monetary assets together. So an Israeli exchange account holding $95,000 of coin and 400 shekels of change is reported at its full six-figure peak. Think about how an exchange account actually works. Money in, coins bought, coins sold, money out. Almost every active account passes through a currency balance at some point in the year, which means very few trading accounts stay purely crypto for a full twelve months. That is the trap. People read "crypto is not reportable" and stop looking, when the right question is whether the account ever held anything else. The FBAR penalties for a missed account run from $16,536 a year for an innocent miss to far worse if the failure was willful, so this is a line worth checking account by account, year by year.

Form 8938: The Question the IRS Has Never Answered

The FBAR has a sibling under a different law, Form 8938, attached to your tax return once foreign financial assets cross higher thresholds ($50,000 for a single filer in the US, up to $600,000 for a couple abroad; the full grid is in our FATCA and Form 8938 guide). Here the picture is different, and stranger. The IRS has simply never said whether crypto on a foreign exchange belongs on the form. The instructions never mention digital assets. The IRS digital-asset pages are silent on it. There is no ruling either way.

What fills the silence is the breadth of the rules themselves. Form 8938 reaches any custodial account maintained by a foreign financial institution, and an exchange that holds coins for customers as its business looks a great deal like one. So the analysis many careful advisors reach, and the one we generally recommend above the thresholds, is to report the account. The asymmetry decides it. Including the account costs you a form, while wrongly omitting one can cost a $10,000 penalty and, worse, keeps your entire tax return open to audit with no deadline until the form is filed. A wallet you hold yourself is a harder case, since it is not an account with any institution, and whether directly held coins are a reportable foreign asset is genuinely unsettled. That one we screen fact by fact rather than answer from a chart.

The Tax Is Owed Either Way, and the IRS Asks Everyone

Everything above is about disclosure forms. The tax itself was never in doubt. A US citizen or resident owes US tax on crypto gains wherever in the world the coins sit, and selling, swapping one coin for another, or spending crypto are all taxable events. There is no foreign-exchange exception and no waiting-for-a-form exception.

Two facts make this concrete. First, every person who files a Form 1040 answers the digital-asset question, right under their name, under penalty of perjury. Did you receive, sell, exchange, or otherwise dispose of a digital asset this year? Answering "no" while trading on a foreign exchange is the same kind of damaging fact as the foreign-account "no" that decides so many FBAR cases. Second, a foreign exchange generally sends nothing to you or to the IRS. US brokers now report customers' crypto sales to the IRS on a dedicated form, but that duty applies to US brokers; the rules for foreign platforms are still being coordinated internationally. The silence is not protection. It just means the whole recordkeeping burden, every buy, sell, and swap with dates and basis, sits on you, which is the material we assemble when a cleanup is needed.

Where Crypto Enforcement Is Heading

Every recent signal points the same direction, toward more visibility and less gap. Since the start of 2025, US crypto brokers report their customers' gross sale proceeds to the IRS, with cost-basis reporting layering in for 2026 sales, so the domestic side of the ledger is now largely transparent. (A companion rule that would have reached decentralized platforms was overturned by Congress in 2025, but the core broker reporting stands.) FinCEN's stated plan to add crypto to the FBAR has been on the books since 2020. And the IRS voluntary disclosure form, the application willful taxpayers use to come in from the cold, now contains an entire section for digital assets, down to naming each exchange. Agencies write disclosure forms for the cases they expect to see.

For someone with crypto abroad, the practical conclusion is the one that runs through all our foreign account reporting work. The years when a gap goes unnoticed are the years to fix it voluntarily, because every cleanup program requires that you get there before the IRS does.

If I Missed the FBAR on Five Exchange Accounts, Is That Five Penalties?

No. One year of missed filing is one violation, however many accounts that year's report should have listed. The FBAR is a single yearly report covering everything you hold, so the number that drives your exposure is the number of years you missed, not the number of exchanges you traded on.

The answer was fought over for years and cost one taxpayer a trip through two federal courts before it was settled. A federal appeals court put the point plainly in a footnote, saying the filing duty "does not turn on the number of accounts, only on the aggregate value in those accounts" and that "only one yearly FBAR is required, whether there are twenty accounts with an aggregate value of $10,000, or one account with a value of $10,000,000." The Supreme Court adopted the same reading for the whole country in 2023.

For someone with coins spread across four or five foreign platforms, the practical difference is large. A non-willful miss is capped by reference to the report rather than multiplied across the accounts, which is often what turns a frightening number into a manageable one and makes coming forward the rational choice. The willful figures are a different matter, and the willful versus non-willful line is where the real money is decided.

Fixing Past Years With Crypto Abroad

If you are looking backward at unreported years, the fix depends on precisely what was missed, and crypto adds one welcome wrinkle. Some of what looks like a violation is not one. If a foreign account was crypto-only, there may have been no FBAR duty at all for those years under the current rule, which narrows the cleanup to the income side. If the account was mixed, the missed FBARs are real, and the standard fix-it programs apply.

When gains went unreported, the streamlined filing compliance procedures are usually the path for a non-willful case, with three years of returns, six years of FBARs, and a penalty of zero for someone who lived abroad or 5% for a US resident. When the income was reported and only a form was missed, cheaper delinquent-filing routes can apply. And when the facts are willful, the Voluntary Disclosure Practice, with its digital-asset section, exists precisely to take criminal exposure off the table, and it is the track we handle in-house. The one universally wrong move is the quiet fix, amending old returns or slipping in late forms with no program and no explanation. The gain reconstruction is often the hardest part of a crypto cleanup, years of trades across platforms, and it is work we route to an international tax preparer.

How We Work, and What We Refer Out

Crypto reporting sits at the unsettled edge of the foreign-account rules, so we are honest about where our role sits. Handled here are the screening that maps each exchange account and wallet to the FBAR, Form 8938, and the income rules; the willful versus non-willful call; the Voluntary Disclosure Practice when the exposure is willful; and the estate side of crypto held abroad (an exchange account is an asset your family will need to find and access someday), all under attorney-client privilege. The streamlined submissions and the large multi-year gain reconstructions are referred to an international tax preparer, with the legal strategy staying here.

Most of this runs by phone and video, which fits clients who are out of state or out of the country, including the many Americans in Israel using Israeli exchanges. The first step is the account-by-account screen, because in this area the difference between "no duty at all" and "years of open exposure" can be one currency balance.

Frequently Asked Questions

Common Situations

The oleh with an Israeli exchange account. An American in Israel has traded on an Israeli crypto platform for years and never filed an FBAR for it, reasoning that crypto is not reportable. A look at the statements shows a shekel balance in the account nearly every month, which made the account reportable in full at its peak value each year. Because he lived abroad and the miss was innocent, the streamlined foreign route cleans up the FBARs and the unreported trading gains together at no offshore penalty.

The investor with a crypto-only account. A Florida resident holds coins on a foreign exchange that has never held a currency balance, and she panics after reading about FBAR penalties. The screen brings good news. Under the current rule the account was not FBAR-reportable at all, so those years need no FBAR fix. She starts reporting the account on Form 8938 going forward as the careful answer, and the only cleanup is a small amount of unreported gain, handled without any program at all.

The estate with coins abroad. A family settling a parent's estate discovers a foreign exchange account no one knew existed and self-custody wallets with no key instructions. Before any distribution, the estate addresses the reporting history, values the holdings at death for the step-up in basis, and builds access into the estate plan for the surviving spouse. The reporting questions were the easy part; the recovered passphrase was the hard one.

Sources of Law

• FBAR authority and reportable accounts: 31 U.S.C. §5314; 31 C.F.R. §1010.350. Crypto-only foreign accounts not currently reportable, and the stated intent to amend: FinCEN Notice 2020-2 (Dec. 31, 2020); no proposed rule has been published as of this writing. Mixed accounts reportable in full at maximum value: FinCEN FBAR filing instructions (maximum value includes currency and non-monetary assets). fincen.gov
• FBAR penalties: 31 U.S.C. §5321(a)(5); 31 C.F.R. §1010.821 (non-willful $16,536 per form, willful the greater of $165,353 or 50%, per the January 17, 2025 adjustment, unchanged for 2026); Bittner v. United States, 598 U.S. 85 (2023).
• Form 8938: 26 U.S.C. §6038D; Treas. Reg. §1.6038D-2 (thresholds); the Form 8938 instructions and IRS digital-asset guidance contain no statement on virtual currency; open statute of limitations, §6501(c)(8).
• Digital-asset income and the 1040 question: irs.gov digital assets. Broker reporting: T.D. 10000, 89 Fed. Reg. 56480 (July 9, 2024) (Form 1099-DA; gross proceeds for sales on or after Jan. 1, 2025, basis for certain sales on or after Jan. 1, 2026; US digital-asset brokers); the decentralized-broker rule (T.D. 10021) was disapproved by Congress, Pub. L. 119-5 (Apr. 10, 2025).
• Voluntary disclosure and digital assets: IRS Form 14457 (Rev. 7-2025), digital-asset disclosure section. Compliance programs: IRS Streamlined Filing Compliance Procedures. irs.gov (retrieved 2026-07-24)

What the Crypto Cases Have Taught Me

In 14 years of law practice, the crypto question I get is never the one the client thinks they are asking. Somebody calls to ask whether cryptocurrency is reportable, I tell them that a crypto-only foreign account is not, and I can hear the relief. Then I ask what else has ever sat in that account, and the call gets longer.

A common question I hear is, "Does my exchange account count if it is only crypto?" My answer is that the asset is the wrong thing to look at. The rule turns on the account, so what I need to know is whether a shekel, a euro or a dollar ever rested in it while a trade settled. On an active account the answer is usually yes, and once it is yes the whole account is reportable at its highest value for the year, coins included.

I have a few take-home points.

The first is that the frightening number is usually not the real one. I read a case about an American woman whose father died in 2009 and who put her inheritance into accounts in the United Kingdom, fourteen of them. Wanting to get right with the government, she came forward on her own through its disclosure program, filed the report she had missed, and amended her return. What she filed was complete and accurate. The government treated each account as its own failure anyway, thirteen separate ones, and assessed $47,279. Rather than pay it she went to court, lost at trial, and won on appeal, where the maximum turned out to be $10,000 for the single report she had filed late.

What I take from that is how much of the exposure was arithmetic rather than conduct. She had already done the honest thing before anyone contacted her, and the difference between $47,279 and $10,000 came down to whether the statute counted reports or accounts. So when a client with coins on four platforms asks me what the worst case looks like, I count years first, because the accounts do not multiply the way people fear.

Practice pointer. Before deciding whether to come forward, I build a grid of years down the side and accounts across the top, and I fill in one thing for each cell, which is whether that account held anything other than coin in that year. The years with a yes are the reports actually at risk. I have watched that exercise cut a client's assumed exposure by two thirds, and I have watched it find a year nobody remembered.

Avoid treating the crypto-only rule as permission to stop looking. The failure I see comes from reading the rule correctly and then never opening the statements, which is how a mixed year sits undiscovered until an examiner finds it first.

An honest limit belongs here. The agency that runs the FBAR said in 2020 that it intends to make virtual currency reportable, and more than five years later no proposed rule has appeared. I cannot tell you when that changes or whether a new rule would reach back, because nobody has promised it would only run forward. On Form 8938 there is no answer at all, in either direction, so anyone who gives you a confident one is giving you an opinion rather than a rule, and I would rather file the form than defend the omission.

Kevin D. Klagge, Esq., admitted in Florida since 2012 and before the United States Tax Court. General information rather than advice on your situation.

Updated on September 8, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US law, not legal or tax advice, and does not create an attorney-client relationship. Crypto reporting rules are unsettled and can change quickly; streamlined submissions and large gain reconstructions are referred to an international tax preparer, while voluntary disclosure for willful exposure is handled here. Penalty figures are adjusted periodically and may change. Your result depends on your specific facts.