One bit of interesting information that came from the session I attended on cryptocurrency and taxation was that the speaker thought people should file FBARs on their foreign exchange accounts as a just-in-case measure. The IRS and Department of Treasury have not issued any guidance on this issue at all.

What is the FBAR?

The FBAR (foreign bank and financial accounts report) is a report filed with the Department of Treasury in which US taxpayers list their foreign financial accounts if the total values of all the accounts is 10,000 USD or more on any day during the year.

You file them here: https://bsaefiling.fincen.treas.gov/main.html

It's actually pretty straight-forward for a government system.

What isn't the FBAR?

It's not a tax. It's a reporting requirement. Basically if the government ever wants to come after your money, they want you to do the work of telling them where everything is.

Why would I do that?

Well, the penalties are pretty severe. Depending on whether there was intent or not, there are very heavy fines and possible jail time.

OK, so let's look at the details;

From the FBAR instructions we have this:

We know that crypto has value.

But is an account on some random exchange a financial account? Maybe.

Does a foreign exchange qualify as a financial institution? Probably not.

When you get into the details, you wouldn't even be able to fill out most of the information about the exchange on the FBAR form like mailing address, phone number, etc.

We also know that crypto is considered property for tax purposes, not a currency or security. But assets can be considered one thing for tax purposes and another for FBAR purposes.

Should You File?

Nobody knows!