Form 8938 is a crucial tax form required under the Foreign Account Tax Compliance Act (FATCA). In 2025, it has officially expanded to include foreign cryptocurrency holdings. If you’re a U.S. citizen, resident, or business owner who holds crypto outside of U.S. exchanges or wallets, you may be legally required to file Form 8938.
📘 Table of Contents
What is Form 8938?
Does Cryptocurrency Trigger Form 8938 Filing?
Who Must File in 2025
FATCA vs FBAR for Crypto
Crypto Thresholds for Form 8938
Step-by-Step: How to File Form 8938 for Crypto
IRS Penalties for Non-Compliance
Best Software Tools for Crypto Form 8938
Common Filing Mistakes to Avoid
FAQs and Tax Tips
SEO Tips for Financial Bloggers on This Topic
Conclusion
1️⃣ What Is Form 8938?
Form 8938, Statement of Specified Foreign Financial Assets, is an IRS form designed to track foreign assets of U.S. taxpayers.
Originally designed for:
Offshore bank accounts
Foreign stocks
Foreign mutual funds
💡 2025 Update: Cryptocurrency is now included
If your crypto assets are held in:
Foreign exchanges (like KuCoin, Binance.com, Bybit)
Foreign custodial wallets
Decentralized platforms hosted outside the U.S.
Then they may be reportable on Form 8938 under FATCA.
2️⃣ Does Cryptocurrency Trigger Form 8938 Filing?
✅ YES, in 2025.
In recent IRS memos and crypto tax guidance, cryptocurrency is now explicitly considered a "foreign financial asset" if:
It is held outside of the United States
It is managed or hosted by a foreign financial institution (FFI)
It has identifiable account info, such as wallet IDs or custodial registration
🔍 Examples of Reportable Crypto Holdings:
3️⃣ Who Must File Form 8938 for Crypto in 2025?
U.S. citizens, Green Card holders, tax residents, and domestic business entities must file if thresholds are met.
📊 Reporting Thresholds (2025):
✅ Important: These are maximum values held at any time during the tax year, not average or ending balances.
4️⃣ FATCA vs. FBAR for Crypto
You may need to file both if your crypto assets meet both thresholds.
5️⃣ Crypto Thresholds for Form 8938 in Detail
✅ Count the following toward your limit:
ETH, BTC, and other assets stored in foreign wallets
Yield farming protocols hosted in foreign DeFi systems
NFT platforms with foreign governance (e.g., Rarible, LooksRare if non-U.S.)
❌ Do not count:
Crypto held in U.S.-based exchanges like Coinbase, Gemini
Hardware wallets in your personal possession (unless foreign-custodied)
6️⃣ Step-by-Step: How to File Form 8938 for Crypto
Step 1: Gather Data
Use platforms like:
Koinly
CoinTracker
TokenTax
Exchange CSV files
Step 2: Determine Maximum Value
Convert to USD using:
IRS Yearly Averages
Daily Spot Prices
Fair Market Value at Peak
Step 3: Complete the Form
Include:
Type of asset (e.g. Virtual Currency)
Name of exchange or institution
Account numbers or public addresses
Country location
Maximum value in USD
Step 4: Attach Form 8938 to Form 1040
Submit by April 15 (or October with extension)
7️⃣ IRS Penalties for Form 8938 Non-Compliance
⚠️ IRS now uses AI and blockchain forensics to detect undeclared foreign crypto.
8️⃣ Best Crypto Tax Tools for Form 8938 Compliance
9️⃣ Common Mistakes to Avoid
❌ Assuming FATCA only applies to banks
❌ Ignoring crypto held on Binance or KuCoin
❌ Not converting values to USD properly
❌ Missing accounts from old wallets
❌ Believing DeFi is “invisible” — it's not in 2025
🔟 FAQs: Form 8938 and Cryptocurrency
❓ Do I file Form 8938 if I use a VPN for foreign exchanges?
Yes, if the exchange is located outside the U.S. — regardless of your VPN.
❓ Are NFTs reportable under Form 8938?
If stored in a foreign platform or tied to foreign custodianship — yes.
❓ What if I use a foreign DeFi protocol with no clear jurisdiction?
You may still need to disclose it based on asset type and user control.
❓ Do hardware wallets count?
Only if managed or backed up abroad (e.g., using foreign custodial recovery service).
🔍 SEO Optimization Tips (For Financial Bloggers & Affiliates)
✅ Conclusion: Crypto & Form 8938 — Report It, Don’t Regret It
In 2025, the IRS has made it crystal clear: foreign-held cryptocurrency must be reported under Form 8938. With international cooperation, AI enforcement, and FATCA integration, failing to file isn’t just risky — it’s expensive.
Whether you’re a retail investor, full-time trader, or long-term HODLer, make sure you:
🧾 Track and value your foreign crypto
📄 File Form 8938 correctly
💼 Use reputable tax software
👨💼 Work with a crypto-savvy CPA
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