Why argue against something that isn't actually in the legislation and is intended to scare people?
Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers--given they can engage in "transfers."
But just because some entity can be considered to exist on the same "continuum" as crypto brokers, doesn't mean there isn't a clear division between them:
https://rationalwiki.org/wiki/Continuum_fallacy
One could also contort themselves into the assertion that convenience stores engage in transfers with "digital assets" (shifting credit via digitally created loans provided by Visa).
Maybe I should publish an article saying this legislation will require 7-Eleven to report to the government every time you buy a twinkie? That'll really get some clicks!
> the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets”
Then this appears to be false
> something that isn't actually in the legislation
Because "digital asset" is extremely broad and can easily be seen to cover things like video game inventory items.
Is there a specific and detailed definition of "video asset" in the legislation?
See page 2435. Digital asset is defined as a digital representation of value recorded on a cryptographically distributed ledger or any similar technology.
Practically, the Secretary and the courts will decide what this means.
If you’re using in-game tokens to represent value and maintain a ledger, then sure, that could count. Which is good. why should it be possible to sidestep this law by creating a coin that is liquid and fungible and has etfs that track it but just happens to be used for in game purchases? That would be a silly and absurd loophole.
If your in game currency is one-way, ie can’t be converted back to USD or any other assets, then it’s by (legal) definition not representation of value.
> but just happens to be used for in game purchases
Because if I make a game where items drop, and players can transfer items between each other, but not convert any of it to real world money... then making the system, or possibly every single player, be responsible for reporting all activity and participants to the government is... to be blunt, bat-shit crazy?
If it is possible to sell in-game items for out of game money (either using in game processes or an external system like a 3rd party site), then would this mean they are "value". If so, does that mean each player that sells items needs to report every transaction? Or that the game system needs to report every in game transaction (transfer of items from one character to another). And that reporting needs to include real life information about the players involved?
Players already have to report substantial real gains on sales of game assets. If you’ve been doing this and not reporting income, especially if it’s beyond trivial sums (eg like 5 figures or so), talk with your accountant ASAP.
Beyond that, it depends, but the answer definitely isn’t “no”. That’s true even today, btw: game companies can’t knowingly allow money laundering through their in game currency, for example, and gambling laws almost always apply if you can cash out and the game contains any type of chance component (eg loot boxes).
Basically, if your game is setup in a way that could be trivially used for transferring real world assets between players, even existing regulations probably already apply. This is one of many reasons most games only support one way transactions — you can move money into the game but not back out (at least without breaking tos)
“X but in a video game” is almost always actually really X when it comes to money and other assets that can flow into and out of the game easily. A VR Wells Fargo branch is still a bank.
> Players already have to report substantial real gains on sales of game assets
That's a pretty far cry from needing to report "user data, including users’ names and addresses" for every in game transfer of digital assets. (As noted in another message, it's still unclear to me if that's what the bill is requiring).
Can you go into more detail here? Looking at a writeup on the legal definition of value [1], it says
> Value sometimes expresses the inherent usefulness of an object and sometimes the power of purchasing other goods with it. The first is called value in use, the latter value in exchange. Value in use is the utility of an object in satisfying, directly or indirectly, the needs or desires of human beings. Value in exchange is the amount of commodities, commonly represented by money, for which a thing can be exchanged in an open market. This concept is usually referred to as market value.
Conceptually, in game items certainly have a an "inherent usefulness", in that they make the game more enjoyable for the person (or person's character) that possesses the item. This value is transferred between players regardless of whether or not the game provides a way to convert it to real money. For all practical purposes, it is impossible for any game that supports trading assets between characters to completely prevent interactions of the form "if you give me this item, I will give you some amount of real world money".
It seems that any in game assets meet the legal definition of value (that I understand from that page). This would mean that any transfer of said assets between characters would need to be reported on.
I'm open to clarification/correction, with a clear statement that my understanding of this is extremely limited. But it seems like the above is accurate. And seems to fall into the previously mentioned "bat-shit crazy" bucket, if true.
That’s a generic legal dictionary. And it’s a definition of one word in a term of art.
(Digital) representation of value means something more specific in the context of securities law. Something that has intrinsic value but cannot be used as a medium of exchange, unit of account, or store of value is unlikely to be regulated as a security.
There's the thing though. The minute you get to the point where the law is ambiguous, you start seeing law enforcement using it as leverage to get what the want. If the bar is "can they convince a judge that this should count", then they an use it to screw someone over.
I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.
But thank you. I very much appreciate you taking the time to put forth your thoughts / knowledge on the subject.
> The minute you get to the point where the law is ambiguous, you start seeing law enforcement using it as leverage to get what the want.
Regulations are rarely explicitly legislated because legislative bodies don't have the time or expertise to maintain the specifics of regulations. Of course, you always want there to be appropriate scoping, but some division of responsibility between the executive and legislative branches is necessary.
I think a good middle-ground here is the updated language from Wyden et al.. I'm not sure how much leverage they have, though -- (D)s won't defect over this issue and it's unclear whether people like Toomey could be brought on board. And if it's not going to flip votes, then changing the language isn't really worth the lift. I would guess the best way to get this change adapted would be to pressure Toomey to vote on infra but insist on this change -- a single additional (R) in the Senate would make this language change over night. But, again, I kind of doubt Toomey considers this a wedge issue.
> If the bar is "can they convince a judge that this should count", then they an use it to screw someone over. I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.
It's not just a judge or a single official. The Secretary will create rules through the regular rule-making process. And then those rules might be challenged in court.
That's the trouble with armchair legislation, no one bothers to read the text in full or understand the rules of the game. Most legislation has a dictionary to define the terms use within.
These definitions are critical and updates to modify a definition without modifying the text can still have dramatic affect.
> Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers--given they can engage in "transfers."
Pardon me for having a legal education and knowing that prosecutors are often more than willing to bend over backwards and squint through one eye.
If it's possible for a prosecutor to argue it, they will eventually argue it, and most of the time the courts won't push back.
>Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers
You mean that squinting and bending that DAs often do to get some ridiculous plea bargain from some innocent schmuck?
>>Law professors and lawyers instinctively shy away from considering the problem of law’s violence. Every law is violent. We try not to think about this, but we should. On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.
>>This is by no means an argument against having laws.
>>It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal.
Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers--given they can engage in "transfers."
But just because some entity can be considered to exist on the same "continuum" as crypto brokers, doesn't mean there isn't a clear division between them: https://rationalwiki.org/wiki/Continuum_fallacy
One could also contort themselves into the assertion that convenience stores engage in transfers with "digital assets" (shifting credit via digitally created loans provided by Visa).
Maybe I should publish an article saying this legislation will require 7-Eleven to report to the government every time you buy a twinkie? That'll really get some clicks!