Crypto Held on Foreign Exchanges: FBAR and Form 8938 Reporting

Whether cryptocurrency held on a foreign exchange must be reported on FBAR or Form 8938 depends on how the exchange holds your assets. If the foreign exchange holds your cryptocurrency in an account that qualifies as a financial account (essentially, if you have a right to have the funds disbursed to you), it likely requires FBAR reporting if the total value of all foreign financial accounts exceeded $10,000 at any point during the year. Form 8938 thresholds are higher and depend on your filing status and whether you live in the US or abroad. The IRS has signaled in multiple pieces of guidance that it views foreign crypto exchange accounts as reportable foreign financial accounts, though the precise rules are still evolving. If you use a hardware wallet or self-custody wallet with no foreign custodian, there is currently no FBAR or Form 8938 reporting obligation, since those forms cover accounts with foreign financial institutions rather than direct ownership of digital assets. Keeping detailed records of when you opened foreign exchange accounts and the peak value during the year is important for accurately completing these reporting forms.