FBAR Violations for Crypto Accounts: What You Need to Know About $100,000 Penalties

If you hold cryptocurrency on a foreign exchange and you're a U.S. person, you could be facing a $100,000 penalty-even if you never sold a single coin. This isn’t a scare tactic. It’s the reality of how the IRS and FinCEN are now treating crypto held overseas. The rules changed. The enforcement is real. And many people are only finding out about it after it’s too late.

What Exactly Is an FBAR?

The FBAR, or Foreign Bank Account Report (FinCEN Form 114), isn’t new. It’s been around since 1970. But for years, it mostly applied to traditional bank accounts, brokerage accounts, and insurance policies held outside the U.S. If you had more than $10,000 total across all your foreign accounts at any time during the year, you had to file. Simple enough.

But cryptocurrency? That was a gray area. Many assumed if it wasn’t a bank, it didn’t count. That assumption is now dangerously wrong. In June 2023, FinCEN announced it was moving to explicitly include virtual currency in FBAR reporting. The final rule is expected by late 2024. But here’s the kicker: the IRS has already started enforcing it.

Who Has to File?

You’re required to file an FBAR if you’re a U.S. person and you had a financial interest in, or signature authority over, foreign financial accounts totaling more than $10,000 at any point during the calendar year.

“U.S. person” means:

• U.S. citizens
• Green card holders
• Resident aliens (those who meet the substantial presence test)
• U.S. corporations, partnerships, or trusts

It doesn’t matter where you live. If you’re a U.S. citizen living in London, Tokyo, or Mexico City, you still have to file. And yes-that includes crypto.

Does Crypto Count as a “Financial Account”?

Until recently, the answer was unclear. But the IRS has made its position clear: yes.

Cryptocurrency held on foreign exchanges like Binance, Kraken (EU), or Coinbase International is now treated as a financial account under FBAR rules. Why? Because these platforms act like banks-they hold your assets, let you trade, and report to regulators. The IRS considers them “financial institutions” under the Bank Secrecy Act, even if they’re not called banks.

Here’s how it works:

• You have $6,000 in Bitcoin on Binance (Singapore)
• You have $5,000 in Ethereum on Kraken (Malta)
• Total: $11,000

Even though neither account alone hits $10,000, the combined total does. That triggers the FBAR requirement. You must report both.

What Happens If You Don’t File?

Penalties are brutal-and they’re getting worse.

There are two types of violations:

Non-Willful Violations

If you simply didn’t know you had to file, the penalty is up to $16,536 per year (as of 2025). That’s the inflation-adjusted cap. It sounds bad, but it’s manageable if you come forward.

Willful Violations

This is where things go off the rails. If the IRS decides you knew you should’ve filed but chose not to, the penalty jumps to $100,000 or 50% of the highest account balance during the year-whichever is higher.

Let’s say you had $200,000 in crypto on Binance in 2021 and never filed. The penalty could be $100,000. Or $100,000. Or $100,000. It doesn’t matter if your total tax liability was $0. The penalty is based on account value, not taxes owed.

And here’s the worst part: the Supreme Court’s Bittner v. United States ruling in 2023 clarified that penalties are assessed per report, not per account. So if you failed to file for three years and had five foreign crypto accounts, you could face $100,000 × 3 = $300,000 in penalties-not $100,000 × 5 × 3.

Real Cases, Real Penalties

This isn’t theoretical. In January 2024, the U.S. government filed its first-ever criminal FBAR case targeting crypto. A man in California was hit with a $100,000 penalty for failing to report $12,000 in Bitcoin on Binance. He didn’t owe any income tax. He just didn’t file the FBAR.

Reddit threads are full of similar stories:

• “I had $8k in Kraken EU. Thought crypto didn’t count. Got a letter from the IRS. Now I’m facing $100k.”
• “I filed amended FBARs for 2020-2023. Used reasonable cause. No penalties.”

According to TaxAudit’s 2024 survey, 43% of U.S. crypto holders with foreign exchange accounts didn’t even know FBAR applied to them.

What Do You Need to Report?

If you’re filing, here’s what the IRS wants:

• Your full name, address, and SSN or ITIN
• Name and address of the foreign exchange (e.g., “Binance Holdings Limited, Singapore”)
• Account number or identifier
• Type of account (e.g., “Cryptocurrency Exchange Account”)
• Maximum value of the account in USD during the year

You must use reliable exchange rates-typically month-end rates from a reputable source like CoinMarketCap or OANDA. Screenshots of your account balance at year-end and during the peak month are required as proof.

How to Fix It If You Didn’t File

It’s not too late. But you need to act now.

The IRS offers two main paths:

1. Delinquent FBAR Submission

If you didn’t file because you didn’t know, you can submit past FBARs with a statement explaining your failure was non-willful. The IRS will often waive penalties if you’re honest and proactive.

2. Streamlined Filing Compliance Procedures

If you’re behind on both FBARs and tax returns, this program lets you file up to three years of amended returns and six years of FBARs with a certification that your failure was non-willful. No penalties if you qualify.

Don’t wait for the IRS to find you. The agency now has automatic data sharing with over 110 countries through FATCA. Exchanges like Kraken and Binance are already sending U.S. taxpayer data to the IRS. Your account is already on their radar.

Tools and Help

Filing FBARs for crypto manually is messy. You need to track values across multiple exchanges, convert to USD, and document everything.

Some tools help:

• CoinLedger: Auto-generates FBAR reports for crypto. $99-$299/year.
• Bitwave.io: Tracks max values and flags foreign exchange accounts.
• TurboTax and TaxAct: Added FBAR crypto modules in early 2024.

But for anything over $50,000 in foreign crypto or multiple years of missed filings, hire a crypto-savvy CPA. Hourly rates range from $350-$600. It’s expensive, but cheaper than a $100,000 penalty.

What’s Coming Next?

The IRS is doubling down. Their 2024-2026 Strategic Plan lists cryptocurrency as a “high-risk compliance area.” By 2025, the OECD’s Common Reporting Standard will require automatic exchange of crypto data between governments. Your account info will be sent to the IRS without you ever filing a thing.

Penalty collections are projected to hit $890 million by 2026-up from $340 million in 2023. The message is clear: the era of ignoring crypto FBARs is over.

Bottom Line

You don’t need to be rich to get hit. You don’t need to owe taxes. You just need to hold over $10,000 in crypto on a foreign exchange and forget to file. That’s enough for a $100,000 penalty.

If you’re unsure whether you need to file, assume you do. File. Amend. Get help. The IRS isn’t looking for perfect taxpayers. They’re looking for honest ones.

Don’t wait for a letter. Act now.