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Monday, April 17, 2023

Tax Day Thoughts On Crypto In MMORPGs

On Saturday I filed my federal and state income tax returns. By file, I mean I opened up the H&R Block software, let it import most of my financial information, did a little additional entry, and hit the send buttons. I noticed a section I had never seen before. Did I convert any cryptocurrencies into real life money in 2022? I can't get away from the subject, can I? 

The idea that the government wants to tax cryptocurrencies is another reason to avoid all these web3/blockchain games popping up all over. Do I really want to play a game in which the government has an interest?

I know that a lot of people want the government more involved in regulating video games. I remember the bad old days when those who really don't like video games decided games were too violent and the government needed to step in. I really shouldn't write in the past tense as politicians continue to blame violence in video games for mass shootings in the United States. 

Another subject I've seen many games journalists and content creators advocate government regulation of gambling within video games. Looking back, the gambling issue was a vector many saw as attacking lootboxes in video games. I'm pretty sure many cheered as the Washington State Gambling Commission went after Valve for skins gambling in connection with Counter-Strike: Global Offensive back in 2016. Some of those same people are complaining that Valve's countermeasures are a little overzealous in 2023. But hey, Valve is going what the government wants, so it's okay, right?

Which now leads to the Web3 craze in MMORPG development. As I saw while preparing my tax returns, the federal government wants its cut of the cryptocurrency market. Then again, the Internal Revenue Service wants its cut on everything. If the IRS is readying an effort to increase enforcement against bartenders, waiters, and others who receive tips, what makes anyone think that eventually cash-hungry governments around the world won't become interested in all these crypto games popping up? Especially if people call on government to "Do something!".

In all honesty, the tax issue is probably the biggest obstacle to my playing one of these Web3/blockchain games like Project Awakening. At the very least, such a game will need to have robust cryptocurrency tracking and reporting features to deal with government agencies demanding a cut of my in-game revenue.  But do I really want to report what I do with my free time to the government? Especially what I do inside a video game? For the makers of these Web3/blockchain video games, you have a high bar to clear.

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