US Crypto Tax Reporting for Expats and Cross-Border Families: FBAR, FATCA & Form 1099-DA

How Crypto Crosses Borders For Tax Purposes

A crypto wallet does not have a country. The US tax code does, and it applies to digital assets in ways that are often counter-intuitive for cross-border families. The Coinbase or Binance statement that arrives at tax time alongside the K-1s and the 1099 composites doesn’t come with a country line on it, and that’s the source of most of the confusion.

This article walks through what the US currently requires from a cross-border family that holds digital assets, there porting forms, the income tax treatment when gains and rewards arrive, and the estate questions that come up when digital assets sit in a household whose tax life crosses borders. It is not a guide on whether to hold crypto, which exchange to use, or how to manage a position. It explains what the rules currently are. Where the position has been moving, the article says so and points to the authoritative source.

Why Crypto Is Harder for Cross-border Families Than the Exchange Statements Suggest

For a US-only investor, crypto is, broadly, a US tax problem with US-domiciled custodians. For a cross-border household, it’s a problem in three layers, reporting rules that ask where the account is held, income tax rules that ask who the holder is and where they were resident when the income arose, and estate rules that ask whose estate the asset sits in and where that asset is treated as situated. The exchange statement at year-end answers none of those questions.

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Reporting: FBAR, Form 8938, and the New Form1099-DA Regime

The reporting layer is where most cross-border crypto holders run into trouble first. Three forms matter, and each captures something different.

FBAR and foreign virtual currency accounts, a position that has moved

FBAR (FinCEN Form 114) requires US persons to report foreign financial accounts where the aggregate value exceeded $10,000at any point in the year. Whether a foreign-domiciled crypto exchange account is, by itself, a reportable foreign financial account has been an evolving regulatory question. FinCEN Notice 2020-2 stated that, at the time, a foreign account holding only virtual currency was not reportable on the FBAR, and FinCEN signaled an intent to amend the regulations to expand reporting to such accounts. As of draft date (April 2026), Notice 2020-2 remains the operative guidance for accounts holding only virtual currency, while accounts holding both virtual currency and other reportable assets remain reportable on the existing basis. Because this is an area where the rule has moved before and may move again, the live FinCEN page is the right reference for each filing year.

Form8938, specified foreign financial assets

Form 8938 (Statement of Specified Foreign Financial Assets) is filed with the US tax return where a US person’s aggregate specified foreign financial assets exceed certain thresholds (which differ for taxpayers living in the US versus abroad). Digital assets held through a foreign financial institution are generally within scope. Direct holdings of digital assets in a private wallet that is not held with a foreign financial institution have not been within the Form 8938 reporting framework on the same basis. Where a position straddles both, some held on a foreign exchange, some self-custodied, the analysis splits.

Form 1099-DA, the 2025 tax year regime

Treasury Regulation §1.6045-1, as amended in 2024, requires US digital asset “brokers” to issue Form 1099-DA reporting gross proceeds (and, for some transactions, basis) on digital asset sales and exchanges. The regime started for the 2025 tax year, meaning the first year of widespread 1099-DA filings will arrive during the 2026 reporting cycle. The regime is custodial-broker-focused: centralized US exchanges that take custody of customer assets are within scope. Non-custodial wallets, decentralized finance protocols, and peer-to-peer transfers fall outside what 1099-DA captures, even though the underlying tax treatment is identical. The form is a reporting overlay, not a change in the substantive tax treatment.

Income Tax on Crypto for Cross-border Holders

The income tax treatment of digital assets sits on top of the reporting framework. For US persons, the tax rules apply regardless of which platform the activity occurred on or which country the wallet was geographically associated with.

Gains, character, and cost basis across wallets

Gains and losses on the sale or exchange of digital assets are characterized as capital under current IRS guidance, and the holding period determines whether the gain is short-term or long-term. The complication for cross-border holders is cost basis. Where a holder has moved assets between exchanges and wallets over time, the basis records often live with the holder, not the exchange. Until 1099-DA is fully bedded in, basis tracking remains the holder’s responsibility. FIFO is the default identification method; specific identification is allowed where contemporaneous records support it.

Staking rewards and DeFi yield as ordinary income

The IRS treats staking rewards as ordinary income at the time the holder has dominion and control over the rewards, essentially, when the rewards are received in a wallet the holder can direct. Revenue Ruling 2023-14 set out this position for proof-of-stake rewards. DeFi yield earned through liquidity provision, lending protocols, and similar arrangements is generally treated as ordinary income on the same basis. The gain or loss on later disposal of the rewarded tokens is then a separate capital event.

Moving jurisdiction mid-holding

When a holder relocates between countries during the period they hold a digital asset, the US tax treatment depends on US residency at the time the income event occurs, not at acquisition. A US person who acquired tokens while abroad and disposed of them while US-resident is generally taxed on the full gain by the US, with foreign tax credits available where the home country also taxes the gain. Where a holder ceases to be a US person, the long-term US tax exposure depends on whether they are subject to the expatriation regime under §877A. The interaction with home-country exit-tax rules adds a second layer that has to be coordinated with the local tax preparer.

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Estate and Inheritance Considerations for Digital Assets

Three estate questions come up in cross-border practice. The first is whether a digital asset is US-situs forestate tax purposes, a question on which IRS guidance is incomplete. Crypto held directly by a non-resident alien generally takes its character from the analysis of intangible personal property, which is typically not US-situs in the absence of a specific rule. Where the asset is held through a US-domiciled custodial broker, the analysis is less clear. The second question is access. A wallet whose private keys are not recorded somewhere accessible to the executor is, in practical terms, lost on death. The third question is documentation, IRS Form 706 reporting of digital assets in a US estate, and the practical handover of access credentials and exchange logins to the executor or trustee.

Where Each Form Captures What, at a Glance

A summary of the three reporting overlays that a cross-border holder of digital assets typically needs to consider, plus the gift- and estate-reporting overlay where transfers occur.

Source: Skybound 2026

Questions To Raise With A Qualified Adviser

Considerations to raise with a qualifiedtax adviser and estate attorney include:

• Whether your foreign-exchange crypto activity creates an FBAR or Form 8938 filing for the current year, and how the live FinCEN guidance applies to your specific account profile.
• How cost basis is being tracked across exchanges and self-custodied wallets, and whether your records would support specific identification rather than default FIFO.
• Whether 1099-DA forms expectedduring the 2026 filing cycle reconcile with the activity records you alreadymaintain.
• How staking and DeFi rewardsearned during periods of non-US residency interact with US foreign tax creditand treaty positions.
• How digital assets are addressed in your estate planning, access, custody, and the US-situs analysis if any holder in the household is a non-resident alien.