FBAR Rules for Crypto Accounts Over $10K: What US Taxpayers Must Know

Key Takeaways

• US persons must file an FBAR if the total value of all foreign crypto accounts tops $10,000 at any point in the year.
• FinCEN Notice 2020‑2 currently exempts pure cryptocurrency accounts, but hybrid accounts that hold fiat are reportable.
• Valuation is done in USD on the day the highest balance is reached; use daily snapshots or reputable tax software.
• Filing is done electronically on the BSA E‑Filing system using FinCEN Form 114, deadline October 15.
• Most experts recommend a conservative approach - keep records and be ready to report if regulations change.

What is an FBAR?

When you own crypto on a foreign exchange, Foreign Bank and Financial Account Report is a filing requirement under the US Bank Secrecy Act that forces US persons to disclose foreign financial accounts. The filing uses FinCEN Form 114 and is due each year by October 15 for the prior calendar year.

Why the $10,000 Threshold Matters

The law looks at the aggregate maximum value of all foreign accounts you own or have signature authority over. If you ever cross $10,000 in total, even for a single day, the FBAR must be filed. For crypto, this means you add up the USD value of every foreign exchange wallet, staking account, or custodial service you control. If the sum of the highest daily balances exceeds $10,000, you’re in the filing zone.

FinCEN Notice 2020‑2 and Pure Crypto Accounts

FinCEN released Notice 2020‑2 on December 31, 2020. It states that a foreign account that holds only virtual currency is not reportable on the FBAR, unless the account also contains reportable assets like fiat currency, stocks, or bonds. This creates a temporary exemption for "pure" crypto accounts on platforms such as Binance.com, KuCoin, or Bitfinex. The notice reads:

"At this time, a foreign account holding virtual currency is not reportable on the FBAR (unless it is a reportable account under 31 C.F.R. 1010.350 because it holds reportable assets besides virtual currency)."

Because the guidance is not a permanent rule, many professionals treat it as a "pause" rather than a green light to ignore compliance forever.

Hybrid Accounts: When Crypto Becomes Reportable

If your foreign crypto wallet also stores fiat - say you keep USD, EUR, or GBP on the same exchange - the account is classified as a hybrid account. Hybrid accounts fall under the standard FBAR rules regardless of the crypto exemption. In practice, many exchanges now offer "fiat‑on‑ramp" services, so a small fiat balance can trigger reporting.

Key definitions still apply:

• Signature authority means you can direct the financial institution to move money or assets.
• Financial interest covers ownership through entities where you hold more than 50% control.

How to Value Your Crypto for FBAR Purposes

Valuation is the trickiest part because crypto prices swing wildly. The IRS expects you to use the highest US‑dollar value of each account during the year. Follow these steps:

1. Pick a reliable price source (CoinMarketCap, CoinGecko, or the exchange’s own ticker).
2. Export daily balance reports from each exchange. Most platforms let you download CSV files.
3. Convert the daily balances to USD using the chosen price source.
4. Identify the day when the sum of all balances hits its peak. That figure becomes the "maximum aggregate value" for FBAR.

If you have many small accounts, spreadsheets become cumbersome. Crypto tax software like CoinLedger, Bitwave, or Koinly can automate the daily snapshot and generate a report ready for FBAR filing.

Step‑by‑Step Guide to Filing the FBAR

1. Register for a BSA E‑Filing account at bsaefiling.treasury.gov. The registration process requires a personal EIN or SSN and a valid email.
2. Collect the required account details: foreign financial institution name, address, and the account number or other unique identifier.
3. Determine whether each account is pure crypto or hybrid. For hybrid accounts, include the fiat portion in the total value.
4. Complete FinCEN Form 114. The form asks for:
   • Tax year being reported.
   • Maximum account value in USD.
   • Account type (e.g., custodial crypto exchange).
5. Submit the form electronically before the October 15 deadline. You’ll receive an electronic receipt - keep it with your tax records.

Remember, the FBAR is separate from your income tax return. You do not attach the FBAR to your IRS Form 1040, but you should retain both together in case of an audit.

Conservative vs. Strict Compliance Strategies

Because the crypto exemption could disappear any time, professionals split into two camps:

Most advisors suggest a hybrid approach: keep thorough records, file only if you hold a hybrid account, and consider reporting pure crypto if your total exceeds $10,000 and you want a safety net.

Compliance Checklist

• Identify every foreign crypto exchange you use.
• Determine whether each exchange holds fiat alongside crypto.
• Export daily balance data for the entire tax year.
• Convert balances to USD using consistent price sources.
• Calculate the highest aggregated USD value across all accounts.
• If the sum > $10,000, fill out FinCEN Form 114.
• Register on BSA E‑Filing, submit before October15, and keep the receipt.
• Maintain all supporting documents for at least six years.

What’s Coming Next?

FinCEN has signaled that it will soon propose rule changes to make virtual currency reportable on the FBAR. Expect new guidance within the next 12‑24 months, and possibly a retroactive component. For now, the safest play is to keep thorough records and consider filing a conservative FBAR if you’re close to the $10,000 mark.

Stay on top of the evolving rules, use crypto‑tax software to track daily balances, and treat your FBAR as part of an overall compliance strategy-not an after‑thought.