The popularity of NFTs has been rapidly increasing over the past year, but regulations and guidance relating to the tax consequences of buying and selling NFTs has been slow to keep up. Despite also living on the blockchain, NFTs and cryptocurrencies are not created equally in the eyes of the IRS. The IRS has addressed the rising popularity of cryptocurrencies and published guidance for crypto-investors but has not yet published any specific guidance for NFTs. This leaves many investors in a position of uncertainty regarding the tax consequences of their investments.
Non-fungible tokens (NFTs) are emerging digital assets with numerous rights and obligations. However, regulations and laws in the United States are only barely beginning to catch up, and NFTs consume nearly as much energy as a small country. Without NFT regulation, climate change catastrophes are likely to be evident sooner than expected.