FATCA & Crypto Reporting Guide for US Citizens (2025)

When it comes to overseas digital assets, FATCA is the U.S. law that forces foreign banks and many offshore platforms to tell the IRS about American account holders. For anyone holding crypto on a non‑U.S. exchange, that rule creates a dual‑track filing headache: you may need to disclose the holdings on Form 8938 and, soon, on the FBAR (FinCEN Form 114). This guide walks through who must report, what counts as a reportable crypto asset, how to value volatile coins, and which forms land on your tax return.

Key Takeaways

• Crypto held on foreign exchanges is generally treated as a “specified foreign financial asset” under FATCA, so Form8938 applies.
• U.S. citizens abroad face higher reporting thresholds than those living in the U.S.
• FinCEN’s proposed rule may soon force FBAR reporting for foreign crypto wallets exceeding $10,000.
• Use conservative market‑value calculations and keep screenshots of account balances for audit safety.
• Professional advice is strongly recommended because guidance is still evolving.

What is FATCA?

FATCA (Foreign Account Tax Compliance Act) was enacted in 2010 to curb offshore tax evasion. It obliges foreign financial institutions (FFIs) to report U.S. account holders to the IRS and forces U.S. taxpayers to disclose foreign assets that exceed certain dollar thresholds on Form8938, attached to the annual Form1040.

Why Crypto Falls Under FATCA

The IRS defines “specified foreign financial assets” broadly: any financial account held by an FFI, plus non‑account assets such as foreign stocks or securities. Most crypto exchanges operating outside the United States qualify as FFIs because they accept deposits, hold assets, and facilitate trades. When an exchange registers with the IRS as an FFI, it must send information about U.S. customers, and those customers must echo the data on Form8938.

Reporting Thresholds by Filing Status

Thresholds differ whether you live in the United States or abroad. The table below summarizes the 2025 limits for unmarried taxpayers, married filing jointly, and married filing separately.

If your total foreign crypto holdings cross these amounts at any point during the year, you must file Form8938.

How to Valuate Volatile Crypto Assets

Valuation is the most painful part of compliance. The IRS expects you to use the fair market value (FMV) in U.S. dollars on the last day of the tax year. For assets that swing wildly, a conservative approach works best: take the higher of the opening‑day price or the closing‑day price, then note the source (e.g., CoinMarketCap, Binance). Keep a screenshot of the price chart for each coin you hold.

If the exchange doesn’t give you an account number, you can list the login email or simply write “unknown” where the account identifier is required. The IRS has accepted this practice for crypto platforms that lack traditional banking identifiers.

Form8938 vs. FBAR: When Both Apply

Historically, crypto was excluded from the FBAR (FinCEN Form114). In 2024, FinCEN issued a proposed rule to bring foreign crypto wallets into the FBAR regime. If the rule finalizes, any U.S. person with a foreign crypto wallet holding $10,000 or more at any time during the year must file an FBAR in addition to Form8938.

Because the FBAR deadline is April15 (with automatic extension to October15), you may need to file two separate reports: Form8938 with your tax return and FBAR via the BSA e‑File system.

Step‑by‑Step Crypto FATCA Filing Process

1. Gather every foreign exchange account statement that shows crypto balances as of 12/31/2025.
2. Calculate the FMV for each coin using a reputable price source.
3. Sum the dollar values; compare to the threshold for your filing status.
4. If over the limit, complete Form 8938:
   • PartI - General information (name, SSN, filing status).
   • Part II - Specify each foreign crypto account, the institution’s name, and the FMV.
   • Attach the form to your Form 1040 by the tax deadline.
5. Check the latest FinCEN guidance; if the FBAR rule is in effect, file Form 114 for any wallet >$10,000.
6. Keep all supporting docs (screenshots, statements) for at least seven years.

Common Pitfalls and How to Avoid Them

• Undervaluing assets: Using the lowest intra‑day price can trigger penalties for underreporting.
• Missing small exchanges: Even a $500 holding on a tiny foreign platform counts if the total exceeds the threshold.
• Assuming FBAR isn’t needed: The proposed FinCEN rule may already be final; verify the latest release.
• Failing to attach Form8938: The IRS will reject a return without the form, leading to filing extensions.

When to Seek Professional Help

Because guidance is still fluid, a qualified CPA or tax attorney can save you from costly mistakes. Look for professionals who have specific experience with digital‑asset reporting, foreign exchange structures, and FATCA compliance. They can help you decide whether to bundle multiple exchange accounts into a single “account” entry or list each separately, and they can draft a reasonable valuation methodology that will stand up to audit.

Future Outlook

Regulators are moving toward clearer crypto‑specific rules. Expect more detailed IRS notices on what qualifies as a “foreign financial account” for digital assets, and likely a finalized FinCEN rule that makes foreign wallets FBAR‑eligible. Until those guidelines land, the safest play is full disclosure on both Form8938 and, if applicable, FBAR.