FinCEN Intends to Make Cryptocurrency Reportable to FBAR

Jafrin  |  Jan 8, 2021

U.S. Treasury has been proclaiming to taxpayers that cryptocurrencies are not required to be reported to Foreign Bank and Financial Accounts (FBAR). However, this will no longer a reality. According to the FinCEN Notice 2020-2, the regulatory agency is intending to regulate cryptocurrency reporting to the Foreign Bank and Financial Accounts Reporting (FBAR). Failing to do so, might land one with penalties that includes $10,000 per violation for non-willful violations and up to $100,000 or 50% of the balance in the account for willful violations.

Cryptocurrency Might be Reportable to FBAR

As per the notice, users in the United States with a financial account such as foreign banking account, securities account, or brokerage account, exceeding over $10,000 in any given year are required to comply with FBAR by filing Form 114.

The FinCEN notice read:

"FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account."

A financial account also includes a savings account, demand, checking, deposit, time deposit, or any other account maintained with a financial institution. Other accounts include the one with a credit card, an insurance policy, securities derivatives, mutual funds, etc.

One is obligated to report even if the user has no associated taxable income. The form must be filed before the financial year-end, i.e. before April 15th.

No Notice Provided Yet on the Amendment

Under the current FinCEN regime, crypto users are not required to comply with FBAR and disclose their overseas crypto asset holdings. However, If the existing rules do get amended, crypto users using foreign cryptocurrency exchanges would have to disclose their holdings exceeding the $10,000 by the end of the current financial calendar.

So far, neither the U.S. Treasury nor FinCEN has issued any additional comment on the notice, including when the notice will get amended.

Related News