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

If you're a U.S. citizen holding cryptocurrency on a foreign exchange, you could be in serious trouble - not because you're breaking the law, but because you might not even know you're required to report it. The IRS isn't just watching your bank account anymore. They're tracking your Bitcoin, Ethereum, and other digital assets held overseas. And if you're sitting on more than $50,000 in foreign crypto, you're already behind on your legal obligations.

What Is FATCA, Really?

FATCA, or the Foreign Account Tax Compliance Act, was passed in 2010 to stop Americans from hiding money in offshore accounts. It forces foreign banks and financial institutions to report U.S. account holders to the IRS. If they don’t, they face heavy fines. But FATCA doesn’t just cover traditional bank accounts. It also covers any financial asset held outside the U.S. - and that includes cryptocurrency.

The IRS hasn’t officially said, “Crypto on Binance or Kraken counts,” but they don’t have to. The law defines “specified foreign financial assets” broadly: any financial account at a foreign institution, or any non-account asset like stocks, bonds, or investments issued by non-U.S. entities. Crypto held on a foreign exchange fits squarely in that definition. If your wallet is on a platform outside the U.S., it’s likely reportable.

When Do You Have to Report?

You only need to file Form 8938 if your total foreign financial assets hit certain thresholds. These numbers matter - and they change depending on where you live and how you file.

• If you’re single and living in the U.S., you report if you had more than $50,000 on the last day of the year, or more than $75,000 at any point during the year.
• If you’re married and filing jointly in the U.S., the thresholds are $100,000 (end of year) or $150,000 (any time during the year).
• If you’re married filing separately, you still use the lower $50,000/$75,000 thresholds.
• If you live abroad, the thresholds are higher - $200,000 on the last day or $300,000 at any time for singles, and $400,000/$600,000 for joint filers.

These numbers include all your foreign assets combined - bank accounts, stocks, real estate investments, and crypto. So if you have $30,000 in a Swiss bank and $40,000 in Bitcoin on Binance, you’re over the $50,000 limit. You must file Form 8938.

Is Crypto Really Covered Under FATCA?

This is where people get confused. Some say, “Crypto isn’t money, it’s property.” Others argue, “It’s not a bank account, so it doesn’t count.” But the IRS doesn’t care about labels. They care about control and location.

If you’re using a foreign exchange like Binance, Kraken, Coinbase Europe, or Bitstamp - all of which are based outside the U.S. - and you have an account there, that’s a foreign financial account under FATCA. Even if you hold crypto in a non-custodial wallet (like MetaMask) but the wallet is linked to a foreign exchange or service that holds your private keys, you could still be caught.

Foreign exchanges themselves are required to register with the IRS under FATCA. The IRS publishes a public list of registered institutions. If your exchange is on that list, they’re already reporting your name, address, account number (or login), and balance to the IRS. That means they already know you’re there. The question isn’t whether they know - it’s whether you’ve told the IRS yourself.

FATCA Isn’t the Only Form You Might Need

Don’t forget about FBAR - FinCEN Form 114. This is separate from FATCA. FBAR kicks in if you have more than $10,000 in foreign financial accounts at any time during the year. Traditionally, crypto wasn’t included. But that’s changing fast.

In 2024, FinCEN proposed new rules to explicitly include cryptocurrency accounts under FBAR. If those rules become final - and they likely will - you’ll need to file both Form 8938 and FBAR if you meet both thresholds. That’s double reporting. And the penalties for missing FBAR? Up to $10,000 per violation, and up to $100,000 or 50% of the account balance if it’s willful.

So if you have $15,000 in Ethereum on Kraken (a foreign platform), you’re already over the FBAR threshold. You need to file Form 114. And if your total foreign assets (including crypto, bank accounts, etc.) exceed $50,000, you also need Form 8938.

How Do You Report Crypto on Form 8938?

There’s no specific line for “Bitcoin” or “Ethereum.” You report it under “Other Financial Assets.” You’ll need to list:

• The name of the foreign platform (e.g., Binance, Kraken)
• Your account ID or login email
• The highest value of your crypto during the year (in USD)
• The value on the last day of the year
• A note saying “Cryptocurrency held on foreign exchange”

If the exchange doesn’t give you an account number - which most don’t - just write “Unknown” or “Login: [email protected].” The IRS accepts this. They’ve said so in guidance documents.

Valuation is tricky. Crypto prices swing wildly. The IRS doesn’t require daily tracking, but you must use a reasonable method. Most tax pros recommend using the highest price during the year for the “maximum value” and the price on December 31 for the year-end value. Use data from reputable sources like CoinMarketCap or CoinGecko - not random exchanges.

What About Taxes on Crypto Sales?

Reporting your holdings on Form 8938 doesn’t replace your regular crypto tax reporting. Every time you sell, trade, or spend crypto, you trigger a taxable event. You must report capital gains or losses on Form 8949 and summarize them on Schedule D. If you earned crypto from staking, airdrops, or mining, that’s ordinary income - report it on Form 1040.

The IRS uses FIFO (first-in, first-out) by default. That means if you bought Bitcoin in 2020 for $5,000 and sold it in 2025 for $60,000, you owe tax on $55,000 gain - even if you had other BTC bought later at higher prices. You can choose specific identification, but you have to track every single unit. Most people don’t.

What Happens If You Don’t Report?

The IRS has tools now that didn’t exist five years ago. They get data from foreign exchanges. They cross-check bank records. They use blockchain analysis firms. If you’re on a foreign exchange, they know.

Penalties for missing Form 8938 start at $10,000. If you don’t fix it after being notified, it can go up to $50,000. For FBAR, penalties are even steeper. And if the IRS thinks you’re hiding assets on purpose? You could face criminal charges.

But here’s the good news: the IRS has amnesty programs. If you’ve never reported foreign crypto before, you can file amended returns and catch up without penalties - as long as you do it before they come knocking.

What Should You Do Right Now?

If you hold crypto on any foreign platform, here’s your checklist:

1. Find every foreign exchange or wallet service you’ve used in the last six years.
2. Calculate your highest balance in USD for each year (use CoinGecko’s historical prices).
3. Add up all your foreign assets - crypto, bank accounts, investments.
4. If any year’s total exceeded the thresholds, file Form 8938 for that year.
5. If any year’s foreign crypto balance exceeded $10,000, file FBAR (FinCEN Form 114).
6. Review your past tax returns to make sure you reported all crypto sales and income.

Don’t wait. The IRS is actively auditing crypto users. They’re not just targeting big investors. They’re going after people with $15,000 in Binance accounts. If you’re unsure, talk to a tax professional who’s handled FATCA and crypto cases before. Not just any CPA - one who knows the difference between a custodial and non-custodial wallet, and who’s filed Form 8938 for crypto.

The Bottom Line

FATCA isn’t going away. Crypto isn’t going away. The IRS is connecting the dots. What used to be a gray area is now a red flag. If you’re a U.S. citizen holding crypto overseas, you’re not hiding anything - you’re just behind on paperwork. The fix is simple: report it. File the forms. Pay what you owe. And move on.

Ignoring it won’t make it disappear. It’ll just make it worse.