Cryptocurrency is no longer a new asset — it’s been around since 2009 — and the number of individuals and businesses who own or use cryptocurrency and NFTs, and the underlying blockchain technology, continues to increase with each passing year. Remarkably, the U.S. and most other countries are still only beginning to regulate the taxation
Taxation of Digital Collectibles: Sports, CryptoPunks and CryptoKitties, Oh My!
What do professional athletes, punk artwork and digital kittens have in common? They are all part of the expansion of valuable collectible assets using cryptocurrency and blockchain technology. You can collect digital items for your favorite baseball and basketball players and then sell them in online exchanges. You can also collect and “breed” your own designer CryptoKitties or purchase a digitally created punk portrait using blockchain technology. Investing in valuable collectibles can be both fun and lucrative. There are now thousands of buyers of these new digital collectibles and transactions involve millions of dollars worth of cryptocurrency. The current leader in digital collectibles is NBA Top Shots with an active marketplace where the highest asking prices are hundreds of thousands of dollars. What are the tax consequences of these new assets? Here are some concepts to consider if you have collectible assets, digital or otherwise.
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