SF-86 Doesn’t Mention Bitcoin. It Still Asks About Yours

Search the 136-page Standard Form 86 for the words “cryptocurrency,” “bitcoin,” or “digital asset” and you will find nothing.

Many applicants take that to mean crypto is irrelevant to the security clearance process. It isn’t.

SF-86 asks about (i) foreign financial interests; (ii) tax compliance; (iii) debt problems; (iv) self-employment; (v) unauthorized computer access, etc. And a crypto portfolio can touch every one of those categories. ([1]).

Defense Office of Hearings and Appeals (“DOHA) judges have already denied clearances in cases where Bitcoin was central to unresolved debt, tax issues, or the purchase of illegal drugs. ([5], [6]).

Below are the actual questions (quoted from the form), and what they mean for federal employees, contractors, and military members who own crypto.

The certification you sign before the questions start

SF-86 begins with a clear warning. The form states that falsifying/concealing a material fact is a felony and that agencies “generally fire, do not grant a security clearance, or disqualify individuals who have materially and deliberately falsified these forms” ([1]).

SF-86, Penalties for Inaccurate or False Statements (verbatim)

The U.S. Criminal Code (title 18; section 1001) provides that knowingly falsifying or concealing a material fact is a felony which may result in fines and/or up to five (5) years imprisonment. In addition, Federal agencies generally fire, do not grant a security clearance, or disqualify individuals who have materially and deliberately falsified these forms, and this remains a part of the permanent record for future placements.

The same instructions add a line that crypto holders should read twice: “responses to this form may be compared with your responses to previous SF 86 questionnaires” ([1], [2]).

For example, a crypto wallet omitted from a 2017 SF-86 but disclosed in 2026 is the type of inconsistency the form is designed to identify.

Statute itself carries fines and imprisonment of up to 5 years for materially false statements in any matter within federal jurisdiction ([12]).

Section 20A: your offshore exchange account is a foreign financial interest

Section 20A is the question most crypto holders get wrong, because it never says “exchange” or “token.” It says this:

SF-86, Question 20A.1 (verbatim)

Have you, your spouse or legally recognized civil union/domestic partner, cohabitant, or dependent children EVER had any foreign financial interests (such as stocks, property, investments, bank accounts, ownership of corporate entities, corporate interests or exchange traded funds (ETFs) held in specific geographical or economic sectors) in which you or they have direct control or direct ownership? (Exclude financial interests in companies or diversified mutual funds or diversified ETFs that are publicly traded on a U.S. exchange.)

The word is “EVER,” in capitals, with no seven-year lookback.

That could be a challenging question for cryptocurrency holders.

Consider an applicant who received dozens of airdrops, moved assets across multiple exchanges, interacted with decentralized finance (DeFi) protocols.

In some cases, DeFi transactions could involve liquidity pools, validators or protocols connected to foreign jurisdictions.

Developing a complete history of potentially foreign financial interests could require reviewing years of wallet activity, exchange records, smart-contract interactions, and blockchain data.

The adjudicator may then analyze those facts under Guideline B (Foreign Influence), which identifies as a security concern “substantial business, financial, or property interests in a foreign country, or in any foreign-owned or foreign-operated business that could subject the individual to a heightened risk of foreign influence or exploitation” ([3]).

SF-86, Question 20A.1 follow-ups (verbatim)

Provide the type of financial interest.

Provide the date acquired.

Provide how the financial interest was acquired (such as purchase, gift, etc.).

Provide the cost (in U.S. dollars) at time of acquisition.

Provide the current value (in U.S. dollars) or the value at the time control or ownership was sold, lost or otherwise disposed of.

Are there any co-owners of this foreign financial interest?

Now try answering those questions for a crypto portfolio built over multiple years.

Digital assets may have been acquired through purchases, airdrops, forks, staking rewards, liquidity mining, DAO participation, exchange migrations, or DeFi transactions.

Section 26: the crypto tax years

Section 26 asks about bankruptcy, gambling, taxes, liens, and delinquent debt.

For crypto holders, one question stands out:

SF-86, Question 26.3 (verbatim)

In the last seven (7) years have you failed to file or pay Federal, state, or other taxes when required by law or ordinance?

The IRS treats digital assets as property, puts a yes-or-no digital asset question on Form 1040.

Any taxes income from staking, mining, airdrops, and sales ([8]).

The guideline addresses unexplained wealth.

“Unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that are inconsistent with known legal sources of income” is its own disqualifying condition, so a crypto windfall you cannot document is a problem even when you owe nothing ([3]). Section 26.7 then asks whether you “defaulted on any type of loan” or had “bills or debts turned over to a collection agency,” which is how leveraged crypto positions surface ([1]).

What DOHA judges have already said about crypto

In June 2025, DOHA judge denied a clearance to an applicant with more than $97,000 in delinquent federal taxes.

The applicant testified that, “[b]elieving that his cryptocurrency investment returns would cover his owed back taxes,” he withdrew $300,000 from a crypto account to purchase a home.

The judge found that it was not clear if the applicant’s tax payments accounted for his “large amount of profit from crypto currency” sales.

The decision noted that this was “not documented.” The judge further observed that “[e]qually unclear are his mounted losses from his gambling in crypto currency” ([5]).

In July 2024 another applicant lost his clearance over a $38,431 charged-off loan.

He “took the money from this loan and invested it in the bitcoin cyber-currency market, with the hopes that it would increase in value.” The judge found the debt to be unresolved ([6]).

The lesson from these decisions is straightforward: cryptocurrency itself is not disqualifying. However, but failing to document/properly report crypto activity on Form SF-86 could be.

For clearance purposes, owning crypto is rarely the issue. Explaining it and documenting it is.

After the clearance: the disclosures do not stop

Clearance holders have continuing reporting duties under Security Executive Agent Directive 3.

Federal employees who file financial disclosures reports must generally report virtual currency held for investment.

Office of Government Ethics treats cryptocurrency as “property held . . . for investment or the production of income,” subject to applicable reporting thresholds. ([9]).

Crypto is not treated as a “publicly traded security.” That means even a small cryptocurrency holding can create a conflict if the employee is involved in a matter that could affect its value ([10]).

FinCEN has also announced its intent to amend the FBAR rules to cover virtual currency held in foreign accounts ([11]).

Contact Us

Questions about cryptocurrency and security clearances? Contact Max Dilendorf at +1 212 457 9797 or info@dilendorf.com, or use our contact page.

Max Dilendorf also advises individuals outside the government sector on cryptocurrency-related disclosure and compliance issues. His represents investment advisers, hedge fund professionals, and other regulated financial industry employees.

This article is for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship with Dilendorf Law Firm. Attorney Advertising.