Crypto on the FBAR and Form 8938

Is cryptocurrency reportable on the FBAR

Not by itself, on the current rules. FinCEN Notice 2020-2 states that the FBAR regulations do not define a foreign account holding virtual currency as a reportable account, so such an account is not reportable unless it holds reportable assets besides virtual currency. The notice also says FinCEN intends to propose an amendment adding virtual currency.

The notice is a single short statement published at the end of 2020. It points to the definitions in the regulation and does not discuss particular platforms, tokens or wallets. FinCEN said it intends to propose amending the regulation so that virtual currency becomes a type of reportable account. As at the date of this post we have not found a proposed or final rule making that change on FinCEN's site or in the Federal Register, and the notice is still listed among the guidance on the IRS digital assets page.

The IRS examines FBAR compliance for FinCEN, and its FBAR guidance (opens the official IRS page in a new tab) does not add anything on crypto. The FBAR itself is filed with FinCEN through the BSA E-Filing System on FinCEN Form 114, separately from the tax return, and is due 15 April, extended automatically to 15 October. The position could change once FinCEN acts on its stated intention, so it is a question to check again every year rather than settle once.

When does a crypto exchange account become reportable

When the account holds something besides virtual currency. A sterling or dollar balance sitting in an exchange account maintained outside the United States is the usual trigger. The notice treats that account as reportable because of the other assets, and the account then counts towards the aggregate FBAR threshold.

The threshold works as it does for bank accounts. If the highest values of all your foreign accounts, added together, exceeded $10,000 at any time in the calendar year, every foreign account is listed. An exchange account that held cash for a single day after a sale, or before a purchase, has held reportable assets during the year. The location of the account follows the entity that maintains it, so check which legal entity your terms of service name.

The notice does not say how to value an account that holds both. One reading counts only the cash. The cautious reading, which we follow, reports the maximum value of the whole account, crypto included, converted at the Treasury year-end rate. Overstating a value on an information report costs nothing, because no tax is calculated on it. Our post on the FBAR maximum value and exchange rate covers the conversion.

• Fiat balances held on the exchange at any point in the year, however briefly
• The legal entity and country named in the exchange's terms
• Whether the platform also offers securities, funds or deposit-type products
• The highest combined value of the account and the date it occurred
• Statements downloaded before an account is closed or a platform withdraws

Do self-hosted wallets go on the FBAR or Form 8938

Neither FinCEN nor the IRS has addressed self-hosted wallets in the FBAR or Form 8938 guidance we have reviewed. A wallet whose keys you hold yourself is not maintained by a financial institution, which is what both reports are built around, so on the current definitions it is difficult to treat it as a reportable account.

The FBAR regulation is concerned with accounts at financial institutions located outside the United States. A hardware wallet in a drawer in London, or a software wallet on your phone, involves no institution holding anything for you. The same logic runs through Form 8938, which reaches accounts maintained by foreign financial institutions and certain other foreign financial assets held outside an account.

Two cautions apply. A wallet provided by an exchange, where the exchange holds the keys, is custody, not self-custody, and falls under the exchange analysis above. And if FinCEN amends the regulation as its notice foreshadows, the definitions could change. Tax on gains and income is unaffected by any of this, as the sections below explain.

Does crypto go on Form 8938

The IRS has not said. The current Form 8938 (opens the official IRS page in a new tab) instructions, the basic questions and answers on the form and the FATCA FAQs do not mention digital assets, virtual currency or crypto. Form 8938 is a tax code requirement, separate from the FBAR, so Notice 2020-2 does not answer the question for it.

The form covers financial accounts maintained by a foreign financial institution and certain foreign financial assets held outside an account. The instructions describe a foreign financial institution, in most cases, as a non-US financial institution that accepts deposits, holds financial assets for others as a substantial part of its business, or is engaged primarily in investing. A custodial exchange outside the United States may meet that description. The comparison of Form 8938 and FBAR requirements (opens the official IRS page in a new tab) lists custodial accounts at foreign institutions as reportable on Form 8938.

Our approach is to include a custodial account at a non-US exchange when the thresholds are met, and to describe it. A person living abroad who is not filing jointly files when specified foreign financial assets exceed $200,000 at year end or $300,000 at any time, and joint filers abroad file above $400,000 at year end or $600,000 at any time. The IRS page Do I need to file Form 8938 (opens the official IRS page in a new tab) confirms that no form is required in a year when no income tax return is required.

The initial penalty for failing to file a required Form 8938 is $10,000, which is why a protective listing is usually the cautious choice. Our article on the FBAR or Form 8938 explains why one report never satisfies the other, and the Form 8938 page covers the form itself.

What is the digital asset question on Form 1040

It is a yes or no question near the top of Form 1040. It asks whether, at any time in the year, you received a digital asset as a reward, award or payment, or sold, exchanged or otherwise disposed of one. Every filer answers it, and it is a tax question, not a foreign reporting one.

The IRS digital assets page says you can answer no if you only held digital assets, bought them with real currency, or moved them between wallets or accounts you own or control. You answer yes if you were paid in crypto, received it from mining, staking or an airdrop after a hard fork, or sold, swapped, spent or gave it away. Swapping one token for another is a disposal, even when no pounds or dollars change hands.

The IRS treats digital assets as property, not currency. Disposals of crypto held as an investment give a capital gain or loss, short or long term depending on whether it was held for more than a year, reported on Form 8949 (opens the official IRS page in a new tab). Staking and mining rewards are ordinary income, usually on Schedule 1. Amounts are measured in US dollars.

US brokers now issue Form 1099-DA, reporting gross proceeds for sales from 1 January 2025 and, for certain sales, basis from 2026. The IRS says customers of foreign brokers may not receive one, and that taxable transactions on a foreign exchange must still be reported. For most UK residents that means building the figures from exchange records. Our crypto tax service does that work.

• Answer yes: selling crypto for pounds or dollars
• Answer yes: swapping one token for another on any exchange
• Answer yes: receiving staking rewards or being paid in crypto
• Answer no: buying crypto with cash and simply holding it
• Answer no: moving coins between wallets you control, with no fee paid in crypto

How do the UK rules and US reporting fit together

The UK taxes the same disposals under its own rules, and HMRC's Cryptoassets Manual (opens the official HMRC page in a new tab) treats selling tokens, exchanging them for other tokens, spending them and most gifts as disposals for capital gains tax. For exchange tokens, HMRC treats the asset as located where the beneficial owner is resident.

A UK resident therefore reports crypto gains on the UK return and pays Capital Gains Tax (opens the official GOV.UK page in a new tab), currently at 18% and 24% above the £3,000 annual exempt amount. The same disposal also goes on the US return. Relief for UK tax on the same gain comes, where available, through the foreign tax credit on Form 1116, and how much can be used depends on how the gain is sourced. From 1 January 2026, HMRC's manual says, exchanges and other service providers must collect customer details, including country of tax residence and tax identification number.

Take a US citizen employed as a software engineer in Leeds. She holds tokens on a UK-based exchange, keeps a sterling balance there for top-ups, and moves part of her holding to a hardware wallet. Because the exchange account held cash, it goes on her FBAR at its whole maximum value with her current account and ISA. The hardware wallet does not, on the current rules. She sold some tokens during the year, so she answers yes to the digital asset question, reports the sale on Form 8949 and claims relief for the UK tax.

Our foreign income and FBAR reporting service prepares the FBAR and Form 8938 from one schedule of accounts. For e-money apps that also hold crypto, see our post on Wise and Revolut on the FBAR. The guide to FBAR and FATCA for UK residents covers every other account type.