Cryptocurrency May Be Subject To FBAR Reporting Soon – Forbes

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The recently released FinCEN Notice 2020-2 states that the agency is intending to subject cryptocurrencies held in overseas locations to the Foreign Bank and Financial Accounts Reporting (FBAR) regime.

Currently, taxpayers with foreign financial interest (bank account, securities account, or brokerage account) exceeding over $10,000 in any given year are required to comply with FBAR by filing Form 114. This form must be filed before April 15th. It should include the following information about the foreign financial accounts:

  • Name on the account
  • Account number
  • Name and address of the foreign bank 
  • Type of account
  • The maximum value during the year

Additionally, taxpayers are required to answer question 7a and 7b on Part III of Schedule B of the tax return. This is very similar to the infamous virtual currency question — At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? — placed on the front page of Form 1040. 

Luckily, under the current FinCEN guidance, cryptocurrency users are not required to comply with FBAR requirements and disclose their overseas crypto asset holdings. However, If the existing rules get amended as described in the notice, cryptocurrency holders who use foreign crypto exchanges would have to disclose their holdings exceeding the $10,000 threshold at any point of the year. Note that there is no tax obligation associated with FBAR. However, this would add to the administrative burden of crypto taxpayers. 


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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

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