One of the long-lasting legacies of cryptocurrencies is that they have gone on to challenge the long-stated idea of what currency is and is not. This took place during crypto‘s fight for legitimacy on the world stage and to be excepted as a legitimate form of payment and as an investment tool across the globe. This has open the floodgates to a whole new sector of the financial industry that does not have the restraints of fiat currency and is essentially borderless. As crypto continues to receive better regulation around the globe, the discussion on what constitutes currency and what does not continues to rage on.
In yet another act of clarification, the Internal Revenue Service in the United States has clarified via its website that video game currency such as Fortnite tokens does not constitute currency.
The Fortnite Conundrum
In a now-updated documents on the IRS website, the agency had previously used examples such as Fortnite’s V-bucks and Roblox’s Robux as forms of virtual currencies and this is relevant because the new IRS tax form requires individuals to specify whether they have dealt in any form a virtual currency which leads one to wonder if tax will be paid on video game currencies.
The definition of a virtual currency that has been used on the IRS website meant virtual tokens that could be easily transferred between users and could be exchanged for fiat currency at some point in time. According to the management of Fortnite, none of these apply to their tokens and as such, the previous inclusion of them as an example was an error.
“V-Bucks cannot ‘be digitally traded between users,’ nor can they be ‘exchanged into, U.S. dollars, Euros, and other real or virtual currencies,” a spokesperson for Fortnite said.
Roblox has also stated in the past of their tokens are not virtual currencies per se but they can, in some cases, be exchanged for finance currency. When this takes place, according to them, the transaction is automatically submitted to the IRS for consideration.