AccountingCryptocurrency

Update on new Bitcoin reporting requirement

This blog post uses “Bitcoin” in the title that actually could refer to all types of virtual currency.

On December 23, 2020 the Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rules that would require money service businesses (“MSBs”) to keep records and submit reports that verify the identity of customers involved in virtual currency or digital assets:

https://www.fincen.gov/sites/default/files/shared/Notice-Virtual%20Currency%20Reporting%20on%20the%20FBAR%20123020.pdf

On January 10 I sounded the alarm for owners of virtual currency on my own blog that owners should be aware of the change coming and and plan proactively:

https://tonynovak.com/cryptocurrency-is-now-required-reporting/

The latest information came yesterday in a guest’s article published on the Procedurally Taxing Blog:

https://procedurallytaxing.com/fincen-moves-to-include-convertible-virtual-currency-on-fbar-form/

Attorney James Creech comments on the proposed change, concluding that “FinCEN has not struck a reasonable balance between the interests of the consumer and the interest of law enforcement in this proposed notice of rulemaking requirement. The proposed rules overly favor law enforcement”. The full comments are here:

https://procedurallytaxing.com/wp-content/uploads/2021/01/FinCen-Comment-For-Submission.pdf

I agree with the tone of Creech’s comments and hope that moderating comments are taken into account in the final rules requiring disclosure of details of Bitcoin owners and their holdings. But with evidence mounting that Bitcoin was used to help finance domestic terrorism in DC this month, the push for disclosure regulation is heightened.