FATCA and Cryptocurrency Reporting for US Citizens: What You Need to Know in 2026

If you're a US 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 supposed to report it. The IRS isn't just watching bank accounts anymore. They're tracking Bitcoin, Ethereum, and every other digital asset held overseas. And if you're sitting on more than $50,000 worth of crypto in a foreign wallet or exchange, you're legally required to tell them - or risk penalties that could cost you tens of thousands of dollars.

What Exactly Is FATCA?

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 account details of US citizens to the IRS. If they don't, they get hit with a 30% withholding tax on US-sourced payments. That’s a big stick. So foreign institutions play along - and they’ve been forced to start asking customers if they’re US persons.

But here’s the catch: FATCA doesn’t just cover traditional bank accounts. It covers specified foreign financial assets. That includes anything held outside the US that has value - stocks, bonds, mutual funds, and now, according to IRS guidance and expert interpretation, cryptocurrency.

When Do You Have to Report Crypto Under FATCA?

The reporting threshold depends on where you live and how you file your taxes. If you’re a single US taxpayer living in the US, you must file Form 8938 if your total foreign financial assets exceed $50,000 on the last day of the tax year - or more than $75,000 at any point during the year. For married couples filing jointly, it’s $100,000 or $150,000. If you live abroad, the thresholds are higher: $200,000 on the last day of the year or $300,000 at any time during the year.

These numbers aren’t just about cash. They include the fair market value of everything you own overseas - including crypto. So if you have 2 BTC worth $120,000 on Binance, Kraken, or any foreign platform, you’ve hit the threshold. Even if you never sold it. Even if you never converted it to USD. The value is what matters.

Is Crypto Really a "Foreign Financial Asset" Under FATCA?

The IRS hasn’t published a clear, official statement saying, "Crypto on foreign exchanges = FATCA reportable." But they don’t need to. The law defines specified foreign financial assets as any financial account maintained by a foreign financial institution (FFI) - and that’s where the ambiguity turns into risk.

Most major crypto exchanges - Binance, Kraken, Bitstamp, KuCoin - are based outside the US. They’re not US-registered financial institutions. So they qualify as FFIs under FATCA. If you hold crypto on one of those platforms, you’re holding it through a foreign financial institution. That makes it reportable.

Even if you use a non-custodial wallet (like MetaMask) but bought the crypto on a foreign exchange, the IRS may still argue the asset originated from a foreign financial institution. Tax professionals overwhelmingly advise reporting it anyway. Why? Because the penalty for not reporting can be $10,000 per year - and up to $50,000 if the IRS catches you later. The cost of filing is far lower than the cost of getting caught.

FATCA and FBAR: Two Separate Rules, Double the Trouble

Don’t confuse FATCA with FBAR. They’re two different forms, with two different agencies, and two different thresholds.

FATCA uses Form 8938, filed with your tax return. FBAR (FinCEN Form 114) is filed separately with the Financial Crimes Enforcement Network. FBAR has a lower threshold: $10,000 at any time during the year. For years, crypto was excluded from FBAR. But in 2025, FinCEN proposed new rules that would explicitly include foreign cryptocurrency accounts.

That means if you had $12,000 in ETH on Binance in June 2025 - even if you sold it in July - you’d have triggered both FATCA and FBAR reporting. You’d need to file Form 8938 and FinCEN Form 114. And you’d need to report the same asset twice.

The IRS and FinCEN are working together. They’re sharing data. They’re cross-referencing exchange records. If you’re holding crypto overseas, you’re not invisible anymore.

How Do You Report Crypto on Form 8938?

Form 8938 asks for details about each foreign financial asset: the name of the institution, account number, maximum value during the year, and whether you have control over the asset.

The problem? Crypto exchanges don’t give you account numbers like a bank does. You don’t get a routing number or a SWIFT code. You get a login and a wallet address.

The IRS knows this. Their instructions say you can list the platform name (e.g., "Binance Global") and write "unknown" or "N/A" for account number. You can even list your username or email address if that’s how you access the account. The goal isn’t perfection - it’s disclosure.

For value, you report the highest fair market value during the year. That means you need to track your crypto’s price history. If your 5 ETH was worth $8,000 in January and $15,000 in June, you report $15,000. Use a reliable price source - CoinMarketCap, CoinGecko, or your exchange’s historical data. Don’t guess. Don’t use the lowest price. Use the peak.

What About Selling or Trading Crypto?

FATCA only asks you to report what you own. But if you sell, trade, or earn crypto, you have separate tax obligations.

Every time you sell Bitcoin for USD, trade ETH for SOL, or earn staking rewards, it’s a taxable event. You must report capital gains or income on Form 8949 and Schedule D. The IRS requires FIFO accounting unless you can specifically identify the units sold.

This means even if you didn’t trigger FATCA because your holdings were under $50,000, you still have to report every trade. And the IRS can see those transactions through exchange reports, blockchain analysis, and third-party data providers like Chainalysis.

What Happens If You Don’t Report?

The penalties are brutal.

For failing to file Form 8938, you face a $10,000 fine. If you still don’t file after being notified by the IRS, you can be hit with another $10,000 per 30 days - up to $50,000. That’s not a typo. That’s $50,000 just for forgetting to check a box.

On top of that, you could be audited. The IRS has teams dedicated to crypto compliance. They’re using AI to match wallet addresses, exchange records, and FATCA data. If you’ve been holding crypto overseas for years and never reported, you’re a target.

The good news? The IRS has voluntary disclosure programs. If you come forward before they come for you, you can avoid criminal charges and reduce penalties. But you have to act before they notice.

What Should You Do Right Now?

Here’s the simple, no-excuse checklist:

• If you have more than $50,000 in crypto on any foreign platform, file Form 8938 with your tax return.
• If you had more than $10,000 in crypto on foreign exchanges at any point in 2025, file FinCEN Form 114 (FBAR) - even if the rules aren’t final yet.
• Track the highest value of your crypto holdings during the year. Use exchange records or CoinGecko.
• Report every trade, sale, or income event on Form 8949 and Schedule D.
• If you’re unsure whether a platform is foreign, assume it is. Better safe than fined.

Don’t wait for the IRS to send you a letter. Don’t hope the rules will change. They won’t. They’re getting tighter.

Bottom Line: When in Doubt, Report

The IRS doesn’t care if you’re new to crypto. They don’t care if you didn’t know the rules. They care if you had the assets and didn’t report them.

FATCA was never meant for crypto. But crypto is now part of FATCA - whether the law says it or not. The data flows. The penalties exist. The tools to catch you are already in place.

If you’re a US citizen holding crypto overseas, you have two choices: get compliant now, or risk losing more than your crypto to the IRS.