Coinbase and Mastercard ink new NFT deal despite looming tax crackdown

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ryptocurrency exchange Coinbase is steaming ahead with its marketplace for non-fungible tokens (NFT) by announcing a partnership with Mastercard. The news comes as the US Internal Revenue Service (IRS) is reportedly gearing up to crack down on the NFT market to collect potentially billions of unpaid taxes.

Coinbase first announced the NFT marketplace back in October, 2021. As Verdict reported at the time, market analysts interpreted the move as another money grab for an exchange already taking home significant earnings on cryptocurrency speculation. “They also have a certain amount of trust built up in the crypto community, so unlike some of the NFT-specialist startups, they might actually be around in a few years,” Catherine Flick, cryptocurrency expert at De Montfort University, told Verdict at the time.

The notion that Coinbase could still be around for a few years have certainly gotten some headwind after the exchange announced its new team-up with Mastercard. The deal would enable Coinbase users to sidestep the process of having to open their crypto wallet and buy cryptocurrencies before they could buy NFTs.

“We’re working to make NFTs more accessible because we believe tech should be inclusive,” said Raj Dhamodharan, EVP of digital asset products at Mastercard. “When more people are included in new technologies, it spurs innovation, helps economies grow and expands choices for consumers.”

Mastercard said the partnership is part of its strategy to make cryptocurrencies and digital assets like NFTs more accessible to the public.

Many NFT collectors accustomed to buying cryptocurrencies could find themselves having to cough up much higher taxes than what they are used to. The reason is that NFTs could be taxed as collectibles rather than assets like Bitcoin, which has a 23.8% tax rate, as reported by CNBC. Comparatively, collectibles could have a tax rate as high 37%.