FBAR Penalties for Crypto Accounts: Avoid $100,000 Fines

If you own crypto on a foreign exchange and think the FBAR (Foreign Bank Account Report) doesn’t apply, you could be staring at a six‑figure fine. This guide explains why crypto counts, how the penalties are calculated, and what you can do right now to stay safe.

What the FBAR Actually Is

FBAR is the informal name for FinCEN Form 114, the annual filing that U.S. persons must submit when the total value of their foreign financial accounts exceeds $10,000 at any point during the year. The requirement comes from the Bank Secrecy Act and is enforced by the Financial Crimes Enforcement Network (FinCEN) within the U.S. Treasury. The deadline is April 15, with an automatic extension to October 15.

Why Crypto Is Now on the FBAR Radar

For years, regulators treated cryptocurrency exchanges as a gray zone because the law talked about “bank accounts” and “securities accounts.” In June 2023 FinCEN issued a rule‑making notice proposing to expand the definition of a “financial account” to include virtual currency holdings on foreign exchanges. The proposal is slated to become final by the end of 2024, and the IRS is already treating crypto the same way in its penalty guidance.

In practice, the same filing rules apply: you must disclose the exchange name, the account number (or a unique identifier), the type of account, and the highest USD value held during the calendar year. The valuation must use a reliable month‑end exchange rate, as required by Rev. Rul. 2019‑24.

Penalty Landscape: From $10,000 to $100,000

Violations fall into two buckets - non‑willful and willful. Non‑willful breaches carry a capped penalty of $16,536 per report (as of 2025). Willful violations are far harsher: the IRS can assess $100,000 or 50 % of the highest account balance, whichever is greater, for each year the FBAR was not filed.

Because the penalty is assessed per report, not per unreported account, you could face multiple six‑figure fines if you had several foreign exchanges that each pushed the aggregate over $10,000. The first known crypto‑specific case - United States v. John Doe - resulted in a $100,000 fine for omitting a $12,000 Binance EU balance in 2021.

Common Mistakes That Trigger Penalties

• Assuming crypto is exempt. A 2024 CoinLedger survey found 68 % of crypto owners with foreign accounts didn’t realize they needed to file.
• Mixing domestic and foreign balances and thinking the domestic portion “cancels out” the foreign one.
• Using the wrong valuation date - the FBAR requires the maximum value at any point, not the year‑end balance.
• Failing to amend prior years when the rule change becomes effective.

Reddit user CryptoTaxConfused shared that they had $8,000 in BTC on a foreign Binance account and thought the $15,000 total (including a domestic account) was safe. The IRS later assessed a $100,000 willful penalty, illustrating how quickly an oversight can become a nightmare.

Step‑by‑Step Compliance Checklist

1. Identify every foreign exchange where you hold crypto. Look for entities incorporated outside the United States - Binance (International), Kraken (EU), KuCoin, etc.
2. Gather monthly statements or screenshots showing the USD value of each holding.
3. Convert each month’s balance to USD using a reputable source (CoinMarketCap, Bloomberg, or a major exchange’s historical rates).
4. Record the highest monthly USD value for each exchange. Add them together; if the sum exceeds $10,000, you must file.
5. Complete FinCEN Form 114 via the BSA E‑Filing System. Provide:
   • Account holder’s name and SSN/ITIN
   • Exchange name and address
   • Account number or unique identifier
   • Maximum value in USD
6. Submit by the deadline. If you miss it, file as soon as possible and attach a reasonable‑cause statement to mitigate penalties.
7. Consider professional help - a crypto‑savvy CPA can reduce the time from 12 hours to a few minutes.

Tools and Professionals to Simplify FBAR Filing

Several tax‑software providers have added crypto FBAR modules in 2024. TurboTax 2024.2 and TaxAct’s CryptoPro both generate the required CSV for the BSA portal. For those who prefer a dedicated service, CoinLedger offers an automated FBAR reporting tool for $199 per year, pulling balances directly from supported exchanges via API.

If your situation is complex - multiple exchanges, high volatility, or potential willful violations - hiring a CPA who specializes in crypto tax is advisable. Rates average $350‑$600 per hour, but a successful amendment can spare you a six‑figure fine.

Future Outlook: More Enforcement on the Way

The IRS listed cryptocurrency as a “high‑risk compliance area” in its 2024‑2026 strategic plan. FATCA data‑sharing agreements now cover over 110 countries, giving the Treasury a real‑time view of foreign exchange balances. By 2026, penalty collections for FBAR violations are projected to hit $890 million, up from $340 million in 2023. That growth signal means the agency will likely pursue crypto cases more aggressively.

Stay ahead by treating every foreign exchange like a traditional bank account today. The rulemaking notice is already in effect; waiting for the final rule is a risky strategy.

Frequently Asked Questions