Are certain cryptocurrency exchanges foreign accounts?
That's not a philosophical musing.
Americans who hold more than a certain amount of money abroad typically have to file reports with both the Internal Revenue Service and the U.S. Treasury. Failure to do so can result in more than $100,000 in fines and time in prison.
"U.S. taxpayers may not even be aware of this requirement because it's not something they readily file every year," said Selva Ozelli, a certified public accountant and lawyer who specializes in the digital coins.
Here are the rules: Anyone with more than $10,000 abroad usually needs to fill out the Report of Foreign Bank and Financial Accounts, or FBAR, with the Treasury Department each year. Another law — the Foreign Account Tax Compliance Act, or FATCA — requires certain U.S. taxpayers to describe their overseas accounts on Form 8938, when they file their taxes with the IRS.