Expatriation Tax and Cryptocurrency: What You Need to Know

When you give up your U.S. citizenship or long-term residency, the expatriation tax, a one-time tax on unrealized gains imposed on certain U.S. citizens and green card holders who leave the country doesn’t disappear just because you moved abroad. It still applies to your cryptocurrency, digital assets like Bitcoin, Ethereum, and tokens that are treated as property by the IRS—even if you’ve never sold them. Many think leaving the U.S. means leaving taxes behind. That’s not true. The IRS still sees your crypto as taxable property, and if you meet the net worth or tax liability thresholds, you could owe up to 30% on everything you own—including tokens sitting in a wallet overseas.

The expatriation tax, a one-time tax on unrealized gains imposed on certain U.S. citizens and green card holders who leave the country kicks in if your net worth is over $2 million, or if you’ve paid more than $184,000 in U.S. taxes over the last five years (2025 threshold). It doesn’t matter if your crypto is on Binance, Coinbase, or a self-custody wallet. The IRS doesn’t care where it’s stored—they care that you owned it. That includes DeFi rewards, earnings from liquidity pools, staking, or yield farming that count as income the moment they hit your wallet. If you earned $50,000 in SOL rewards last year and never sold them, that’s still taxable income. And if you exit the U.S. with that wallet still full, the IRS will treat it as if you sold it on the day you renounced. No exceptions. No loopholes. Just a big tax bill.

Most expats don’t realize how many crypto transactions can trigger tax events before they even leave. Airdrops, hard forks, swapping tokens on Uniswap, or even gifting crypto to a friend overseas—all of these can create taxable events under U.S. law. If you’re planning to renounce, you need to track every single crypto transaction for the past five years. No one’s keeping that record for you. And if you’ve held crypto through a foreign exchange like Bitsdaq or WBB Exchange—both now defunct—you still owe taxes on whatever you owned, even if the platform vanished. The IRS doesn’t care if the exchange is dead. Your liability isn’t.

This isn’t about avoiding taxes. It’s about understanding what’s real. The expatriation tax isn’t a rumor. It’s a law with teeth. People who ignore it end up with penalties, interest, and even frozen assets. If you’re thinking about leaving the U.S. and you hold crypto, you need to act now—not after you’ve already renounced. Get your records in order. Know your cost basis. Talk to someone who’s handled crypto expatriation before. What you don’t know won’t save you—it’ll cost you.

Below, you’ll find real cases of people who got caught—by exchanges that vanished, by airdrops they forgot about, by DeFi rewards they didn’t report. These aren’t hypotheticals. They’re lessons from people who lived it. Learn from them before you make the same mistakes.