Tokens and NFTs earned inside blockchain games. Earnings are ordinary income at fair market value when you control them; selling them later is a capital transaction, and in-game purchases with tokens are disposals.
Players do not think of game rewards as income, and the volume of small transactions rivals DeFi. If the activity is regular and profit-driven it may be a business, with expenses deductible and self-employment tax due.
Yes, at the value of the tokens or NFTs when you receive them, whether or not you cash out to dollars.
Source: IRS Notice 2014-21; Rev. Rul. 2023-14 (by analogy)
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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