FATCA and Crypto: How U.S. Tax Rules Affect Global Crypto Users

When you hold crypto outside the U.S., FATCA, the Foreign Account Tax Compliance Act, a U.S. law requiring foreign financial institutions to report account holders with U.S. ties to the IRS. Also known as Foreign Account Tax Compliance Act, it doesn’t just target bank accounts—it includes crypto exchanges, wallets, and DeFi platforms that handle U.S. persons’ assets. If you’re an American living abroad, or even a non-U.S. user on a platform that serves Americans, FATCA is already watching your transactions.

FATCA doesn’t just apply to traditional banks. Any entity that holds financial assets—like crypto exchanges registered in Europe, Asia, or Latin America—must identify U.S. customers and report their account balances and transaction history to the IRS. Platforms like Binance, Kraken, and even smaller DeFi gateways have had to adapt. Many now ask for your Social Security Number, U.S. address, or citizenship status during onboarding. If you’re not a U.S. person but use a U.S.-based service, you might still be flagged by mistake. That’s why some exchanges now block U.S. users entirely to avoid the reporting burden.

Related to this are foreign financial accounts, any crypto holdings held outside the U.S. that exceed $10,000 at any point in the year, which trigger FBAR filing requirements. And while FATCA is about institutional reporting, FBAR is about individual disclosure. Both are enforced by the IRS, and penalties for missing either can hit $10,000 per violation. Even if you didn’t sell crypto, just holding it on a non-U.S. exchange can create a reporting obligation. The IRS doesn’t care if you think it’s "just crypto"—it’s treated like cash in a foreign bank.

What about decentralized platforms? That’s the gray zone. Most DeFi protocols don’t collect KYC, so technically, they’re not bound by FATCA. But if you connect your wallet to a U.S.-based aggregator or use a centralized bridge, you might still be caught in the net. The IRS has been using chain analysis tools to trace wallets linked to U.S. IPs or known exchanges. So even if you think you’re "off the grid," your activity might still be tied back to you.

And it’s not just about compliance—it’s about risk. If you’re a non-U.S. resident using a crypto platform that reports to the IRS, your data could be shared with your home country’s tax authority under automatic exchange agreements. Countries like Canada, Australia, and the UK have signed onto these deals. So FATCA doesn’t just affect Americans—it reshapes how the whole global crypto ecosystem handles identity and reporting.

Below, you’ll find real examples of how FATCA impacts crypto users—from exchanges that changed their policies to users who got hit with surprise tax bills. These aren’t theoretical cases. They’re from people who thought they were safe, until the IRS showed up. Whether you’re trading on a foreign exchange, staking on a non-U.S. DeFi protocol, or just holding crypto overseas, you need to know where FATCA touches you—and how to respond.