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The Financial Crimes Enforcement Network (FinCEN) has announced that it will soon propose new regulation affecting cryptocurrency holdings at foreign exchanges. This proposal is separate from the one FinCEN recently proposed on cryptocurrency wallets.
FinCEN’s New Crypto Rules
FinCEN, a bureau of the U.S. Department of the Treasury, issued a notice on Thursday regarding a new filing requirement for cryptocurrencies. FinCEN detailed:
Currently, the Report of Foreign Bank and Financial Accounts (FBAR) regulations do not define a foreign account holding virtual currency as a type of reportable account.
The notice adds that the bureaus “intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account.”
Shehan Chandrasekera, Head of Tax Strategy at Cointracker, explained that “FBAR is a form you file with your tax return if you have any foreign financial assets over 10K at any time of the year.” He clarified, “There are no taxes to be paid with this form, just additional disclosure.”
Marc Boiron, attorney at Manatt, commented: “Goodbye non-US exchanges … FBARs will need to be filed for non-US virtual currency accounts.” He emphasized:
Accidentally failing to file an FBAR can result in a civil penalty of $10,000 for each violation.
“Another example of US regulatory overreach,” Adam Cochran, Duckduckgo’s strategist, opined. “Utterly insane – but this rule will be something FinCEN would use to go after international exchanges more broadly.”
Lawyer Jake Chervinsky described that this proposal “seems targeted at users of non-US exchanges” and he believes that it “shouldn’t apply to assets in self-custody.” He suggested that the reason for the proposal might be either tax evasion or “bringing non-US crypto companies into compliance with the Bank Secrecy Act.” FinCEN is also currently trying to implement rules concerning crypto wallets before the end of the Trump term.
What do you think about this new rule FinCEN will propose? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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