When you hold cryptocurrency on foreign exchanges or wallets outside the U.S., you may need to file Form 8938, a tax form the IRS uses to track foreign financial assets. Also known as Statement of Specified Foreign Financial Assets, it’s not optional if your holdings hit the reporting threshold. This isn’t about whether you made a profit—it’s about whether you owned crypto abroad, period.
The IRS treats crypto like property, but Form 8938 focuses on foreign financial accounts, including crypto held on exchanges based outside the U.S.. If you used Binance, Kraken, or any other platform not registered in the U.S. and your total value crossed $50,000 at year-end (or $75,000 at any point during the year), you’re required to file. The same applies if you stored crypto in a non-U.S. wallet you control, like a hardware wallet managed from overseas. Missing this form doesn’t just mean an audit—it can trigger penalties up to $10,000 per year, and even more if the IRS says you acted willfully.
Many people think if they didn’t sell crypto, they don’t owe anything. That’s wrong. Form 8938 has nothing to do with capital gains. It’s purely about disclosure. The FATCA, the Foreign Account Tax Compliance Act that powers Form 8938 was created to stop Americans from hiding money offshore. Crypto is now firmly in its crosshairs. The IRS cross-references data from exchanges, blockchain analytics, and even foreign bank reports. If you held $60,000 in ETH on Binance Singapore and didn’t report it, they’ll find out.
What counts as a foreign asset? Any crypto held on an exchange not licensed in the U.S., any wallet hosted outside the country, or any DeFi protocol based overseas—even if you never moved funds. U.S.-based platforms like Coinbase or Kraken (U.S. entity) don’t trigger Form 8938. But if you used Uniswap through a non-U.S. wallet, or staked tokens on a foreign protocol like Aave on the Polygon chain via a non-U.S. node, that’s reportable. The key is location of control, not just where the transaction happened.
There’s no gray area here. The IRS doesn’t care if you didn’t know the rule. They’ve been sending letters since 2021 to people who held crypto abroad. One trader in Texas got hit with $42,000 in penalties because he held $85,000 in BTC on a German exchange and didn’t file Form 8938. He thought since he didn’t sell, he was fine. He wasn’t.
And it’s not just individuals. If you’re part of a DAO with treasury funds held in a Swiss wallet, or if you run a crypto business using offshore infrastructure, Form 8938 applies to you too. The IRS doesn’t make exceptions for decentralization. If the asset is foreign and you own it, you report it.
What you’ll find below are real cases, breakdowns of what counts, and how to fix past mistakes. Some posts show how people got caught. Others explain how to file retroactively without triggering criminal penalties. You’ll see what exchanges trigger the form, what wallets don’t, and how the 2025 IRS audit tools now track crypto across chains and borders. This isn’t theory—it’s what’s happening right now in tax offices across the U.S. Don’t wait for a letter. Know your obligations before it’s too late.
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