Crypto FBAR Penalties: $100,000 Fines & How to Avoid Them

Key Takeaways

• U.S. persons must report any foreign crypto exchange account that hits $10,000 in aggregate value.
• Willful non‑filers can face up to FBAR penalties of $100,000 per violation or 50% of the highest account balance.
• Non‑willful failures are capped at $16,536 per report (2025 figures).
• Filing is done electronically via FinCEN’s BSA E‑Filing System - no paper option.
• A solid checklist and reliable valuation method can keep you from costly mistakes.

Imagine discovering that the $8,000 worth of Bitcoin you keep on a foreign exchange could land you a six‑figure fine. That’s the reality for many U.S. taxpayers who assumed crypto accounts were off‑limits for the Foreign Bank Account Report (FBAR). This guide walks you through why crypto now falls under FBAR, what the $100,000 penalty really means, and exactly how to file correctly.

When the IRS talks about FBAR (Foreign Bank Account Report), it’s referring to a mandatory annual filing that U.S. persons must submit if they hold foreign financial accounts exceeding $10,000 at any time during the year. The report, officially FinCEN Form114, is administered by the Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act (BSA). Failure to file can trigger steep penalties, especially now that virtual currency is being pulled into the regulatory net.

What the FBAR Covers - Including Crypto

The original FBAR rules focused on traditional bank, securities, and insurance accounts. However, a 2023 FinCEN notice signaled a shift: virtual currencies held in overseas exchanges will be treated the same as any other foreign financial account. The rulemaking aims to amend the BSA so that any foreign crypto account with a value over $10,000 must be disclosed.

Who must file? U.S. citizens, residents, green‑card holders, lawfully present aliens, U.S. corporations, partnerships, and certain trusts. If the combined maximum value of all foreign accounts-crypto or otherwise-exceeds $10,000 at any point in the calendar year, a FBAR is required.

Understanding the $100,000 Penalty

Penalties fall into two buckets:

• Non‑willful violation: The IRS assumes the taxpayer made an honest mistake. The cap is $16,536 per report for 2025 (adjusted for inflation from the 2023 $10,000 figure).
• Willful violation: The taxpayer knowingly ignored FBAR rules. The fine jumps to $100,000 per violation or 50% of the highest account balance, whichever is greater. Multiple years of non‑filing can multiply the exposure.

These amounts were clarified in a 2025 penalties guide from Taxes for Expats, which raised the non‑willful cap and kept the willful cap at $100,000. The Supreme Court’s pending Bittner decision may later adjust the per‑report versus per‑account assessment, but the $100,000 figure remains the headline risk for crypto holders.

When Does Your Crypto Trigger FBAR?

Two key tests decide if you need to file:

1. Aggregate value test: Add up the highest USD value of each foreign crypto account at any point during the year. If the sum tops $10,000, you must file.
2. Foreign jurisdiction test: The exchange must be incorporated, organized, or otherwise located outside the United States. U.S.-based exchanges (e.g., Coinbase US) do not count, but BinanceInternational, Kraken EU, or any exchange with a non‑U.S. legal entity does.

Even a short‑term spike-say, a $12,000 Bitcoin balance on a foreign exchange for one day-triggers the filing requirement.

Step‑by‑Step: Filing a Crypto FBAR

1. Gather account info: Record the account holder’s name, account number (or a unique identifier), exchange name, and physical address of the exchange.
2. Determine max value: Use a reputable source (CoinMarketCap, Bloomberg, or a major exchange’s historical rates) to capture the highest USD value for each account. The IRS’s Rev. Rul.2019‑24 requires a “reliable exchange rate.”
3. Convert to USD: Apply the month‑end rate for each month, but flag any day where the balance exceeds the $10,000 threshold.
4. Complete FinCEN Form114: Log in to the BSA E‑Filing System, select “Add New Report,” and fill out the required fields. The form asks for the maximum value, account type ("Virtual currency account"), and the exchange’s details.
5. Attach supporting docs: Upload screenshots of account balances, transaction histories, and proof of the exchange’s foreign status. While not mandatory, documentation shields you if the IRS later audits.
6. Submit before the deadline: April15 is the default deadline; an automatic extension to October15 is available if you file a Form4868 for your tax return.

Remember, the FBAR is filed separately from your federal tax return; you do not attach it to Form1040.

Common Crypto FBAR Mistakes & How to Dodge Them

• Assuming crypto is exempt: The new FinCEN rule removes the gray area. Treat every foreign exchange like a bank.
• Mixing up thresholds: The $10,000 limit is an aggregate across all foreign accounts, not per‑account.
• Using the wrong valuation date: The IRS wants the highest balance during the year, not just the year‑end figure.
• Skipping documentation: Without screenshots, the IRS may deem your explanation “unreasonable” and impose higher penalties.
• Relying on exchange‑provided reports alone: Some exchanges list balances in native crypto, not USD. Convert yourself using a reliable source.

One Reddit user, u/OverseasCrypto, learned the hard way-an unreported $12,000 Kraken EU balance resulted in a $100,000 willful penalty. In contrast, u/CompliantCryptoTrader filed amended FBARs with reasonable‑cause statements and escaped any fine.

Crypto FBAR Compliance Checklist

Professional Help & Tools Worth Considering

Crypto tax compliance can eat up 8‑12 hours per client, according to the AICPA’s 2024 survey. If you’re not a tax pro, hiring a specialist can save you from a $100,000 hit.

• Specialized CPAs: Look for practitioners who list “crypto FBAR” as a service. Hourly rates range $350‑$600.
• Automated software: CoinLedger offers a crypto FBAR module for $99‑$299 per year. TurboTax 2024.2 and TaxAct’s CryptoPro FBAR add‑on also handle the Form114 upload.
• DIY resources: The IRS’s Publication5569 provides the official filing instructions; FinCEN’s BSA E‑Filing website has a sandbox for practice submissions.

Regardless of the route you take, keep a paper trail of every step. If the IRS ever challenges your filing, you’ll have the backup they demand.