OK, here’s the method I will use for computing a FBAR Item 15
cryptocurrency wallet maximum amounts:
FBAR Line Item Filing Instructions.pdf says:
Item 15. Enter the maximum value of the account in U.S. Dollars during the calendar year being
reported. See the General Instructions on Monetary Amounts for guidance on determining the
maximum value of an account. Use the end of the year conversion rate.
Then in General Instructions:
Monetary amounts: When recording the maximum value of accounts, record all amounts as
U.S. Dollar amounts rounded up to the next whole dollar. The amount $15,265.25 would be
recorded as $15,266. The maximum value of the account can be determined using the following
NOTE: After determining the value of the account, as described below, if the value results in a
negative (minus) value, enter zero (0) in item 15, “Maximum account value.”
Step 1. Determine the maximum value of each account (in the currency of that account) during
the calendar year being reported. The maximum value of an account is a reasonable
approximation of the greatest value of currency or nonmonetary assets in the account during
the calendar year. Periodic account statements may be relied on to determine the maximum
value of the account, provided that the statements fairly reflect the maximum account value
during the calendar year. For Item 15, if the filer had a financial interest in more than one
account, each account must be valued separately. For an account denominated in U.S. Dollars,
the maximum value of the account is the largest U.S. Dollar value of the account during the
Step 2. In the case of non-United States currency, convert the maximum account value for each
account into United States dollars. Convert foreign currency by using the Treasury’s Financial
Management Service rate (select Exchange Rates under Reference & Guidance at
www.fms.treas.gov) for the last day of the calendar year. If no Treasury Financial Management
Service rate is available, use another verifiable exchange rate and provide the source of that rate.
In valuing currency of a country that uses multiple exchange rates, use the rate that would
apply if the currency in the account were converted into United States dollars on the last day of
the calendar year.
OK say my bitcoin wallet had 1 BTC in March, 3 BTC in June, back down to
1 BTC in November. So the maximum BTC was 3. Now we have completed Step
1 in the instructions above.
Now for step 2 I will use one of the many daily quotation services to
find the BTC/USD exchange rate for 12/31.
I will try to “provide the source of that rate” next to the number I enter.
Note that nowhere in the instructions does it concern itself with spikes
and dips in the BTC/USD exchange rate throughout the year. It only
repeats “on the last day of the year”.
Also nowhere does it say “if on June 5th you had … and the exchange
rate on that day was …”. All it mentions is step 1) greatest value (in
that currency itself) for entire year, and step 2) then convert that
value into USD at end of year rate.
I’ll Cc: FBARquestions@irs.gov and FRC@fincen.gov just in case there is something I missed.