IRS removes ether and two popular gaming tokens as examples of convertible virtual currencies

The Internal Revenue Service (IRS), the tax collection agency of the U.S. government, has removed ether (ETH) and two popular gaming tokens - Fortnite’s V-bucks and Roblox’s Robux - as examples of convertible virtual currencies.

The change took place on Wednesday, according to a report from Bloomberg Tax. The IRS’ section on virtual currencies now only mentions bitcoin (BTC) as an example.

If V-bucks and Robux stayed on, it would have required millions of users to a new disclosure requirement - Fortnite and Roblox reportedly have a combined user base of over 300 million.

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The IRS’ new disclosure requirement, in revised tax-filing Form 1040, asks people to answer yes or no for a question on whether or not they received, sold, exchanged, or otherwise acquired a financial interest in virtual currency during 2019.

On its website, the IRS defines virtual currency as a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value. While convertible virtual currency is defined as one that has an equivalent value in real currency, or that acts as a substitute for real currency.

Bitcoin is one example of a convertible virtual currency, per the IRS. “Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies."

It is worth noting that ether will still likely be treated as convertible virtual currency, just like bitcoin.

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.