The Financial Crimes Enforcement Network (FinCEN) continues to impose new policies for cryptocurrency users in the U.S. and wants digital asset owners to report if they have more than $10,000 in cryptocurrencies with foreign financial or virtual asset service providers.
The regulator has been tasked with monitoring potential legal violations of domestic financial laws, and the recent move is a part of its broader efforts to keep the cryptocurrency industry in Check.
FinCEN announced its plans to amend the Bank Secrecy Act’s Foreign Bank and Financial Accounts (FBAR) regulations on January 1, 2021, with a rulemaking notice. The notice came just three weeks prior to when the Treasury Department’s leadership is going to change.
“FinCEN 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,” the notice states.
While there is no solid timeline as to when this proposal is set to be implemented, the amendments would bring FBAR rules around digital asset holdings in line with cash held outside the United States by citizens or other U.S. persons. Customers of crypto exchanges like Bitstamp and Bitfinex are expected to be affected the most.
As of now, FBARs are filed by those individuals who have an average of over $10,000 in foreign financial accounts, including currencies. The existing laws don’t include cryptocurrencies as an FBAR-reportable account. However, the new amendment is looking to change that.
The Internal Revenue Service (IRS) website states that the individuals filing FBARs must provide their name on the account, account number, name and address of the foreign bank, type of account, and the maximum value held during the year. Anyone who fails to file this would be subjected to penalties, including fines, per the website.
It is also unclear what additional information must be included in the filing like blockchain addresses.
FinCEN cracking down
The announcement just days before the public comment period for another set of FinCEN policies that requires Cryptocurrency businesses that are registered to keep track of customer transactions along with the verified identity of the counterparty, or if the counterparty has used an “unhosted or otherwise covered wallet” in case the transaction is greater than $3,000.
If both of these proposed rules are implemented, it would mean cryptocurrency owners would now have to report their holdings while exchanges will be compelled to store customer information.