FATCA and Cryptocurrency Reporting for US Citizens: What You Must Know in 2025

If you're a US citizen holding cryptocurrency on a foreign exchange, you're likely already walking a tightrope between compliance and confusion. The IRS doesn't send reminders. No one calls to warn you. And if you're sitting on $50,000 or more in Bitcoin, Ethereum, or any other digital asset overseas, you could be facing penalties-no matter how small your transaction history is. This isn't about tax evasion. It's about FATCA and the murky rules around crypto that even many accountants are still figuring out.

What FATCA Actually Requires

FATCA, or the Foreign Account Tax Compliance Act, was passed in 2010 to stop Americans from hiding money offshore. It forces foreign banks, investment firms, and other financial institutions to report accounts held by US persons to the IRS. If you're a US citizen-even if you live in New Zealand, Canada, or anywhere else-you have to report certain foreign financial assets if they cross specific value thresholds.

The numbers matter:

• If you're single and living in the US: report if your foreign assets hit $50,000 on the last day of the year, or more than $75,000 at any point during the year.
• If you're married filing jointly and living in the US: the threshold is $100,000 at year-end or $150,000 at any time during the year.
• If you're living abroad: thresholds are higher, but they still apply. For single filers, it's $200,000 on the last day or $300,000 at any time.

You file this on Form 8938, attached to your annual tax return (Form 1040). Missing the deadline? Penalties start at $10,000 and can climb to $50,000 if you don’t fix it after an IRS notice.

Does Cryptocurrency Count as a Foreign Financial Asset?

Here’s where it gets messy. The IRS hasn’t issued a clear, official statement saying: “Yes, crypto on Binance or Kraken is a FATCA reportable asset.” But they also haven’t said “No.” And in tax law, silence usually means “yes, you’re on the hook.”

FATCA defines “specified foreign financial assets” broadly. It includes:

• Financial accounts held at foreign institutions
• Stocks or securities issued by non-US companies
• Financial instruments with non-US counterparties

A foreign crypto exchange like Binance, Kraken, or Bybit? If it’s based outside the US and holds your crypto in a custodial account (which most do), it’s very likely considered a foreign financial institution under FATCA. That means your holdings there count as a reportable asset.

Even if you hold crypto in a non-custodial wallet (like MetaMask) but bought it through a foreign exchange, the IRS may still consider it a foreign financial asset if the platform facilitated the purchase and retains control over your keys-even temporarily.

Tax professionals overwhelmingly advise: report it. The cost of getting it wrong-fines, interest, audits-far outweighs the hassle of filing Form 8938.

FBAR Is Also in Play

Don’t forget about FBAR. That’s FinCEN Form 114, the Foreign Bank and Financial Account Report. It’s separate from FATCA. It’s filed directly with FinCEN, not the IRS. And until recently, crypto wasn’t included.

But in 2024, FinCEN proposed new rules that would explicitly bring cryptocurrency accounts under FBAR reporting. If you held more than $10,000 in crypto on foreign platforms at any time during the year, you’ll need to file FBAR-on top of Form 8938.

That’s double reporting. Double risk. Double paperwork.

Example: You have $12,000 worth of ETH on Binance (based in the Cayman Islands). You also have $8,000 in BTC on Kraken (based in Malta). That’s $20,000 total. You need to file both Form 8938 and FBAR.

The IRS doesn’t care if you didn’t sell anything. You didn’t earn income. You didn’t move funds. Just owning it above the threshold triggers the requirement.

How to Value Your Crypto for Reporting

Crypto prices swing wildly. A Bitcoin that was worth $60,000 in January might drop to $45,000 by December. Which value do you use?

The IRS says: use the fair market value on the last day of the tax year. If you’re reporting at any point during the year (because you crossed the $75,000 threshold mid-year), use the highest value reached during that period.

But here’s the problem: most foreign exchanges don’t give you a clean year-end statement. They don’t email you a CSV with daily balances. You’re on your own to track it.

Many US taxpayers use crypto tax software like Koinly, CoinTracker, or TokenTax to auto-import transactions and calculate values. If you’re using a foreign exchange that doesn’t integrate with these tools, you’ll need to manually record daily prices from CoinGecko or CoinMarketCap. Write it down. Save screenshots. Keep backups.

The IRS accepts “reasonable methods” for valuation. But if you’re off by $20,000 and get audited, you’ll need proof you weren’t just guessing.

What If the Exchange Doesn’t Give You an Account Number?

Traditional banks give you account numbers, addresses, SWIFT codes. Crypto exchanges? Not so much.

Form 8938 asks for “account number” and “financial institution address.” What do you put if you’re holding crypto on a platform that doesn’t issue account numbers?

The IRS says: use your login email or username. For the address, write “unknown” or “foreign exchange platform-no physical address provided.” They’ve seen this before. They’re not going to reject your form because you didn’t have a bank routing number.

Pro tip: Keep a record of your login credentials, the exchange’s legal entity name (usually found in their Terms of Service), and the country where they’re headquartered. That’s your audit trail.

Other Tax Reporting You Can’t Ignore

FATCA and FBAR are just the tip of the iceberg. Every time you:

• Sell crypto for USD
• Trade one crypto for another
• Use crypto to buy goods or services
• Receive crypto as payment

…it’s a taxable event. You must report capital gains or income on Form 8949 and Schedule D. If you earned crypto as income (like staking rewards or airdrops), report it as ordinary income on Form 1040.

The IRS uses FIFO (first-in, first-out) by default. That means if you bought 1 BTC in 2021 for $20,000 and another in 2023 for $45,000, and you sell 1 BTC in 2025 for $60,000, they assume you sold the first one. Your gain is $40,000-not $15,000.

You can choose specific identification if you track each coin’s cost basis, but you have to document it before the sale. No retroactive labeling.

What Happens If You Didn’t Report?

If you’ve been holding crypto overseas and never filed Form 8938 or FBAR, you’re not alone. Many people didn’t know they had to. But the IRS is catching up.

They now cross-reference data from foreign exchanges that have signed FATCA agreements. Over 100 countries participate. Thousands of platforms report. Your name, email, transaction history-it’s already in their system.

The good news? The IRS has voluntary disclosure programs. If you come forward before they contact you, you can file amended returns, pay back taxes and interest, and often avoid criminal penalties.

Don’t wait for a letter. Don’t hope it’ll go away. The clock is ticking.

What Should You Do Now?

Here’s your action plan:

1. Identify every foreign exchange or wallet custodian where you’ve held crypto since 2010. Include Binance, Kraken, Coinbase International, Bitstamp, etc.
2. Calculate the highest value of your crypto holdings on each platform during each tax year since 2010.
3. Check if any year exceeded the FATCA threshold ($50K/$75K for US residents).
4. Check if any year exceeded $10,000 in total foreign crypto holdings-this triggers FBAR.
5. Use crypto tax software to generate Form 8949 and Schedule D for all trades and income events.
6. Consult a US tax professional experienced in crypto and FATCA. Don’t rely on generic CPAs.
7. If you missed filings, consider filing under the IRS’s Streamlined Filing Compliance Procedures.

Don’t try to do this alone. The rules are complex, the penalties are steep, and the IRS is watching.

What’s Coming Next?

The IRS and FinCEN are moving fast. Expect:

• More foreign exchanges to be forced into FATCA compliance
• Clearer guidance on non-custodial wallets and DeFi protocols
• Integration of crypto data into automated IRS matching systems
• Increased penalties for non-compliance

The era of “crypto is anonymous” is over. The US government has the tools. They’re using them. If you’re a US citizen with foreign crypto, compliance isn’t optional. It’s survival.