Living Abroad, Trading Crypto: What the IRS Still Sees

If you’re an American living abroad and dabbling in crypto, it might feel like you’re out of the IRS’s reach. No U.S. address, no American bank account, maybe your Ethereum’s sitting quietly on a Swiss exchange or a Ledger in your desk drawer. And anyway, you’re not some big trader, just a few buys here and there, maybe a bit of staking. Who’s really going to care?

Well… the IRS might.

A lot of people assume crypto and physical distance add up to invisibility. But the U.S. tax system doesn’t work that way. If you’re a U.S. citizen or green card holder, your U.S. tax obligations follow you no matter where you go or where your assets live. And when it comes to tax in crypto, what was once seen as a kind of tax-free grey area isn’t really flying under the radar anymore.

How the IRS Sees Crypto (Even When You’re Abroad)

Let’s be clear: the IRS treats crypto as property, not currency. That means any time you sell, trade, or spend it, even if it’s just swapping Bitcoin for Ethereum, you could be creating a taxable event. And if you’re earning crypto through staking, mining, or being paid in it for freelance work? That’s income. Taxable income.

It doesn’t matter if you’re living in Lisbon and using a Malta-based exchange. It’s still reportable because you are still reportable.

Don’t Assume Foreign Exchanges Keep You Hidden

A common myth: “If I trade on Binance UK or Bitpanda, how would the IRS ever know?” Well, increasingly, they can.

Many countries (over 100, actually) share financial data with the U.S. through agreements like FATCA. That includes tax IDs, account balances, and, yes, crypto exchange activity. Some platforms have already started asking users for passport info or Social Security numbers, often because they’re prepping to comply with upcoming rules.

And from 2026, the U.S. will require brokers, including foreign ones with U.S. users, to issue Form 1099-DA. That’s going to make it much harder to stay off the IRS’s radar just by using a non-U.S. exchange.

What You Might Need to Report

If you’re living abroad and own or trade crypto, here’s what you might need to file:

• Form 1040: Your standard U.S. tax return, which now includes a very direct digital asset question.
• Schedule D + Form 8949: For reporting crypto capital gains or losses.
• Schedule 1 or C: If you’ve earned crypto through staking, mining, or freelance gigs.
• FBAR (FinCEN 114): If you’re holding crypto in foreign accounts that also hold fiat (a tricky nuance).
• Form 8938 (FATCA): If your foreign assets, including crypto, go over certain thresholds.

There’s still debate over whether wallets like MetaMask or hardware wallets fall under FBAR rules. The IRS hasn’t fully clarified, but that’s hardly a green light to ignore everything.

Tools to Make It Less Painful

Tracking your crypto activity across wallets and exchanges isn’t easy, especially if you’ve been at it for a few years. Tools like Koinly, CoinTracker, and CoinLedger can help simplify things. They import transaction history, calculate gains, and generate IRS-ready reports.

Just keep in mind, they’re not always perfect. You may still need a human advisor to review things, especially if you’ve moved countries or used multiple platforms with spotty records.

Fell Behind? There’s Still a Way Back

If you didn’t realize you needed to report crypto (and you’re not alone), the IRS Streamlined Foreign Offshore Procedures might help you catch up without penalties if your non-compliance was non-willful.

You’ll need to:

• Live outside the U.S.
• File the last 3 years of returns
• File 6 years of FBARs (if required)
• Submit a statement explaining what happened (Form 14653)

Plenty of expats have used this route successfully, especially once they realized that even small crypto holdings could push them over reporting thresholds.

Final Thought

The truth? Crypto isn’t invisible anymore. And living abroad doesn’t shield you from U.S. tax rules, it just complicates them. That said, this doesn’t have to turn into a financial nightmare. If you take the time to understand what’s required, or better yet, work with someone who does from Expat Tax Online, you can stay ahead of it.

And that’s way easier than trying to explain a few years of unreported staking income under pressure.