Welcome to This Week in the Metaverse, where Fortune rounds up the most interesting news pertaining to NFTs, culture, and virtual worlds. Email marco.quiroz-gutierrez@fortune.com with tips.
While Coinbase battles it out with Gary Gensler and the Securities and Exchange Commission, the IRS is taking on NFTs.
In a statement released Tuesday, the Internal Revenue Service said that it's considering whether to tax NFTs like other collectibles, including gems or artwork. This is the first attempt the agency has made at trying to define how NFTs should be taxed—collectibles are taxed at a higher rate than other assets when sold after a year—and its ramifications could ripple throughout the industry.
The agency is seeking comments from the public until June 19.
Elsewhere, companies are still laying the groundwork for the adoption of NFT tech. PlayStation maker Sony filed a patent recently that would protect its rights to create NFTs that can be transferred between games and consoles, a key interoperability mechanism that could fuel adoption of the tech in the gaming industry.
The patent also opened the door to NFTs being passed from one generation of console to another, for example from the PS4 to the PS5, or between Sony’s and a competitor’s devices. It also noted the potential uses of NFTs in esports, adding, according to CoinDesk: “In some example embodiments, the task may include a victory in an esports tournament and the digital asset may be usable via the NFT by the first end-user entity across plural different computer simulations."
Finally, as rumors circulate about former president and current candidate Donald Trump being indicted soon, the floor price of the NFT collection he endorsed has skyrocketed.
The collection, which was mocked for its crude art, has jumped double digits on NFT marketplace OpenSea to a price floor of 0.5 Ether, or around $883, from 0.3 Eth, or about $530, last week.
Company spotlight
One of the main issues with the mass adoption of Web3 tech has traditionally been onboarding, but a new startup, Redeem, is trying to change that by taking advantage of something we use every day: our phone numbers.
Instead of going through a complicated process to set up a crypto wallet, Redeem creates it for users automatically. Imagine a festival where the organizers are giving away a free NFT. Even if the attendees have no Web3 experience, all they need to do is scan a QR code, send a text to verify their phone number, and Redeem automatically creates a Polygon wallet linked to their phone number and deposits the NFT. The company also lets users link other types of existing wallets.
Founder and CEO Toby Rush said this technology could be transformative for companies looking to give away digital collectibles or incorporate NFT token-gating into events.
“There's no app to download. There's no form to fill out. So, literally, if you can click on a link, and hit send, that's it,” Rush told Fortune.
When I tried out Redeem’s tech for myself, it took less than a minute from scanning a QR code to getting a sample NFT in a new wallet that displayed on the NFT marketplace Rarible. When I went to add a second NFT through the demo on Redeem’s website, I repeated the process of scanning a QR code but this time for a sample token-gated ticket. Immediately, Redeem recognized that I already had an account tied to my phone number and put the new NFT into the same crypto wallet.
In other news
Pace Verso, the Web3 hub of New York City-based Pace Gallery and generative A.I. platform Art Blocks, announced three new NFT projects by artists Trevor Paglen, Maya Lin, and John Gerrard. The projects will be available for purchase on artblocks.io and sold via dutch auctions. One of the pieces, by Paglen, is an interactive and experiential NFT series in which Paglen has hidden Easter eggs for collectors to uncover, decipher, and use in other parts of his project. Collectors who find them get a free limited-edition vinyl LP from Paglen’s related “speculative reality work” titled CYCLOPS, and a gelatin-silver print by the artist.
Supermodel and entrepreneur Karlie Kloss partnered with Roblox to launch a new experience in the digital world called FASHION KLOSSETTE. In the game, users can work their way up in the fashion industry from intern to editor-in-chief by designing looks to display on a virtual runway and in galleries. Kloss created the items with a team of talented Roblox designers that included 17-year-old developer Rush Bogin, who has been consulting Kloss on her metaverse ventures, and Jenni Svoboda, who designed the model's digital floral dress from the Carolina Herrera Spring/Summer 2023 runway.
Magic Eden launched a marketplace for the steadily growing Bitcoin NFT market this week. Building on its present support for Solana, Ethereum, and Polygon NFTs, Magic Eden's new shop will help capitalize on the 400,000 Inscriptions, or minted Bitcoin NFTs, that exist to date. Initially the marketplace will include 13 collections, including Taproot Wizards, Inscribed Pepes, and Bitcoin Bandits.
