NFT Tax, Fiat Transactions

Apple’s announcement that it will allow NFT apps on the Apple App Store -- clarifying what had been a gray area for some time now -- should have been great news. But there’s a catch: Apple also decided it would impose a 30% commission on sales, as well as the condition that all transactions must take place in-app in fiat currency.

Non-Fungible Token (NFT) marketplaces are under much greater regulatory scrutiny these days and subject to actions from lawmakers, and this development sets up a battle with a giant corporate rule maker in the tech world.

Many NFT companies reacted to the news by saying they will not be releasing products on the App Store. Speaking to The Information, Magic Eden Co-Founder Sidney Zhang said they have never enabled buying and selling on its mobile app due to the high commission taken by Apple.

Magic Eden, which is Solana’s leading NFT marketplace, said it will withdraw its app from the App store after the Apple commission was announced. Since then, Apple has said it will lower its commission to 15% for smaller NFT marketplaces. Other Web3 leaders like Epic Games CEO Tim Sweeney have said Apple’s plans will kill the NFT app business.

The decision to impose a 30% commission on all transactions was roundly criticized by the NFT community. NFT marketplaces like OpenSea and Magic Eden take a commission of no more than 2.5-5%. Given the downturn in NFT prices, the 30% commission is seen by project and game owners as an imposition of Web2 practices in the Web3 space.

Some like Gabriel Leydon, CEO of Limit Break, have welcomed the decision by Apple, saying it could help bring the digital assets and Web3 wallets to millions of Apple users around the world.

In a bear market where NFT prices have tanked, adding even a 15% charge to NFT sales seems completely unpalatable Web3 players. Will the draw of Apple’s huge user base be enough to overcome it?