In the future, if an American holds more than $10,000 (10,900,000 won) cryptocurrency on a foreign exchange, it is expected to report it to the authorities. This is because the U.S. government attempts to add cryptocurrency to foreign financial accounts reporting targets.
The Financial Crimes Enforcement Bureau (Finsen, FinCEN) under the US Treasury Department issued a short notice on December 31, New Year’s Eve. According to the notice, Finsen plans to amend the Bank Secret Act (BSA) and add’Virtual Currency’ to the subject of FBAR reporting. Finsen did not disclose when the law was revised.
According to the current law, Americans must report to the authorities if they have a total of more than $10,000 (10,900,000 won) of assets, including currency, in their foreign financial accounts. Cryptocurrency is not included in the report, so Finsen plans to correct it.
According to the U.S. Internal Revenue Service (IRS) regulations for filing foreign financial accounts, Americans are required to report their account name, account number, foreign bank name and address, account type, and annual holdings. Failure to report will result in penalties including fines.
It can be said that the US government recognized cryptocurrency as an intact asset and settled in institutional rights. However, the market could be interpreted as a bad news in terms of the government’s attempts to identify all of the American cryptocurrency assets.
In particular, foreign exchanges such as Bitstamp and Bitfinex, which are widely used by Americans, are likely to be affected.
Currently, Finsen is pushing for another cryptocurrency regulation. It is to apply the travel rule to the personal wallet connected to the exchange.
According to Finsen’s legislative notice on December 23, the cryptocurrency exchange must store the sender’s personal information when sending more than $3,000 (3,260,000 won) a day with a personal wallet.
In addition, if it exceeds $10,000, the transaction details and trader personal information must be reported to Finsen. This is called a high cash transaction report (CTR).
If both regulations promoted by Finsen come into effect, Americans must report to the authorities if they hold more than $10,000 in cryptocurrency.
Meanwhile, in Korea, the Act on International Tax Adjustment (National Law) was amended in December, and cryptocurrencies (virtual assets) of foreign exchanges were added to the target of reporting overseas financial accounts. From October 1, 2021, Koreans must report the balance of cryptocurrency they hold on foreign exchanges to the National Tax Service. In addition, if Koreans gain capital gains in cryptocurrency due to the revision of the income tax law, they must pay taxes from 2022.
Translation: Kim Byeong-cheol/Coindesk Korea
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