FBAR Violations for Crypto Accounts: What You Need to Know About $100,000 Penalties
23 December 2025

If you're a U.S. person holding cryptocurrency on a foreign exchange and you haven't filed an FBAR, you could be sitting on a time bomb. The IRS isn't just watching traditional bank accounts anymore-they're tracking crypto. And if your foreign crypto holdings crossed $10,000 at any point last year, you were legally required to report them. Failure to do so? You could face a penalty of up to $100,000-or 50% of your account balance, whichever is higher.

What Exactly Is an FBAR?

The FBAR, or Foreign Bank Account Report (FinCEN Form 114), isn't a tax form. It's a financial disclosure requirement. If you're a U.S. citizen, green card holder, or resident alien, and you had a financial interest in or signature authority over foreign financial accounts totaling more than $10,000 at any time during the calendar year, you must file an FBAR. This includes bank accounts, brokerage accounts, insurance policies with cash value, and now-according to recent regulatory moves-cryptocurrency held on foreign exchanges.

It's not about how much you earned. It's about how much you held. Even if you never sold a single Bitcoin, if your Binance, Kraken, or Coinbase International account hit $10,001 on December 15th, you had to report it. And if you didn't? You're in violation.

Cryptocurrency Is Now Clearly Covered-Here's Why

For years, people assumed crypto didn't count. After all, Bitcoin isn't a bank account. But FinCEN, the agency behind FBAR, made it official in June 2023. Their proposed rule change explicitly included virtual currency held in foreign financial institutions as a reportable asset under the Bank Secrecy Act. This wasn't a rumor. It was published in the Federal Register. And while the final rule is expected by late 2024, the IRS has already started enforcing it.

The IRS doesn't wait for perfect rules to act. In January 2024, they filed their first-ever criminal FBAR case targeting unreported crypto holdings on Binance. The penalty sought? $100,000. The account balance? $12,000. The message is clear: the IRS considers foreign crypto exchanges as financial institutions. If you're holding crypto on one outside the U.S., it's a foreign financial account. Period.

How Much Can You Really Be Fined?

There are two types of violations: non-willful and willful.

  • Non-willful: If you simply didn't know you had to file, the penalty is capped at $16,536 per violation (as of 2025, adjusted for inflation). This applies if you file late but show reasonable cause.
  • Willful: If the IRS believes you knew you should have filed but chose not to, you're in serious trouble. The penalty is the greater of $165,353 or 50% of the highest balance in your foreign accounts during the year. For someone with $200,000 in crypto on Kraken EU, that’s $100,000-just for one year.

And here’s what most people don’t realize: the Supreme Court’s 2022 Bittner decision changed how penalties are calculated. Before, the IRS could hit you with $10,000 for every unreported account. Now, they can only charge you once per year-per FBAR filing, not per account. That’s a small win. But if you missed filing for three years? That’s three separate $100,000 penalties.

A child accountant examining crypto wallets connected to a growing 0,000 balloon.

What Counts as a Foreign Crypto Account?

Not every exchange qualifies. You only need to report accounts on exchanges that are legally based outside the U.S. and operate as financial institutions. That means:

  • Yes: Binance (non-U.S. entity), Kraken (EU-based), Coinbase International, Bybit, Huobi, Bitstamp
  • No: Coinbase (U.S.), Gemini (U.S.), Kraken U.S. (U.S.-regulated arm)

It’s not about where you live. It’s about where the exchange is incorporated. So if you're in Texas but hold BTC on Binance Singapore, that’s a foreign account. If you're in New Zealand but a U.S. citizen? Still report it.

How the IRS Knows About Your Crypto

You might think you’re hidden. You’re not.

Since 2022, major foreign exchanges like Binance, Kraken, and Coinbase International have been required to collect U.S. taxpayer IDs from American customers. They’re now sharing that data with the IRS under FATCA treaties. The IRS has direct access to your account history, transaction logs, and balance snapshots. They don’t need you to confess-they just need to cross-reference your tax return with what they already have.

In 2023, the IRS collected $1.2 billion from international tax enforcement. Nearly 30% of that came from FBAR penalties. And crypto is now their top-priority compliance area. They’re not bluffing.

Common Mistakes People Make

Most people who get hit with penalties didn’t try to cheat. They just didn’t know.

  • Mistake #1: Thinking crypto doesn’t count. It does.
  • Mistake #2: Only reporting bank accounts and ignoring crypto. The $10,000 threshold is aggregate. If you had $7,000 in a Swiss bank and $4,000 in Binance? That’s $11,000. You need to file.
  • Mistake #3: Using the wrong exchange rate. The IRS requires you to use a reliable source (like CoinMarketCap or CoinGecko) and report the highest value in USD during the year-not the value on December 31st.
  • Mistake #4: Filing late without an explanation. If you file after April 15, you need to include a reasonable cause statement. Ignorance isn’t enough.
A happy person filing FBAR online as crypto coins celebrate with a rainbow to peace.

What Should You Do Right Now?

If you’ve held crypto on a foreign exchange and didn’t file an FBAR for any year since 2017:

  1. Stop panicking. The IRS has amnesty programs.
  2. Calculate your highest balance. Use month-end prices from a reputable source. Track the peak value per year.
  3. File amended FBARs. Use the FinCEN BSA E-Filing System. You can file for past years-even if you missed the deadline.
  4. Include a reasonable cause statement. Explain you weren’t aware of the requirement. Many people get penalties waived this way.
  5. Get help. A crypto-savvy CPA or tax attorney can guide you through the process. Avoid DIY unless you’re confident.

One Reddit user, u/CompliantCryptoTrader, filed amended FBARs for 2020-2023 after a warning from Bitwave.io. He paid zero penalties. He didn’t hide. He didn’t argue. He just filed.

Tools and Resources

You don’t need to do this alone.

  • Bitwave.io and CoinLedger offer automated FBAR reporting for crypto. Prices start at $99/year.
  • TurboTax and TaxAct now include FBAR modules for crypto users (2024 versions).
  • FinCEN’s BSA E-Filing System is the only way to file. No paper forms allowed.
  • IRS Publication 5569 and Rev. Rul. 2019-24 detail valuation rules.

Professional help costs $350-$600/hour, but it’s cheaper than a $100,000 penalty.

What’s Next?

By 2025, the OECD’s Common Reporting Standard will automatically share crypto account data between over 110 countries. The IRS won’t need to ask for it-they’ll get it directly from foreign exchanges. Your privacy is gone. Compliance is your only option.

The clock isn’t ticking. It’s already run out for many. But it’s not too late to fix it. The IRS would rather you come forward than punish you. They want the money, not the drama.

Do I have to report crypto on FBAR if I didn’t sell it?

Yes. FBAR is about ownership, not transactions. If you held $12,000 in Bitcoin on Binance at any point during the year, you had to report it-even if you never sold, traded, or moved it.

What if I have crypto on multiple foreign exchanges?

You must combine the balances across all foreign exchanges. If you had $6,000 on Kraken and $5,500 on Binance, your total is $11,500. That triggers the filing requirement. Each exchange doesn’t need to hit $10,000 on its own.

Can I file FBAR myself or do I need a tax pro?

You can file yourself using FinCEN’s BSA E-Filing System. But if you’re unsure about exchange jurisdiction, valuation, or past-year filings, hiring a crypto tax expert is the safest move. A $500 consultation could save you $100,000.

What happens if I don’t file now and the IRS finds out?

The IRS will likely assess the maximum penalty: $165,353 or 50% of your highest balance, whichever is higher. They can also pursue criminal charges for willful evasion. You’ll lose control of the outcome. Filing voluntarily gives you a chance to reduce or eliminate penalties.

Is there a statute of limitations for FBAR violations?

No. Unlike income tax, there’s no time limit on FBAR penalties. The IRS can go back 10, 15, even 20 years if they suspect willful evasion. If you held crypto on a foreign exchange in 2018 and never filed, you’re still at risk.

Does living outside the U.S. exempt me from FBAR?

No. U.S. citizens and green card holders must file FBAR regardless of where they live. If you’re a U.S. person living in New Zealand, Australia, or Japan and hold crypto on a foreign exchange, you still have to report it.

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