A good example of a closed-flow virtual currency is Monopoly money. Seeing how they work is easier than defining how they work.Ĭlosed Flow. It is drawn from the US General Accounting Office “ Virtual Economies and Currencies” issued in 2013 as guidance for the Internal Revenue Service for tax purposes. The following chart spells out how each of the three main types of virtual currencies for mobile apps works. The 3 Kinds of Virtual Currencies for Mobile Apps And don’t mistake anything we say as legal advice… that’s what Lawyers are for. Note that, even in the U.S., each of the 50 states may have its own interpretations and outlooks on virtual currencies, too. laws, as each country defines and treats virtual currencies differently. Two are taxable, may be subject to licensing requirements and regulations - and their misuse may represent criminal activity. There are three main types which we’ll cover here.

However, all virtual currencies are not created equal. Precise statistics are not available, but virtual currencies for mobile apps factor heavily into the $37 billion of global in-app purchases in 2017. Let’s look before we leap into virtual currencies while focusing on how they are treated under US laws. Even so, other issues arise when peering into this virtual vault as underscored by our opening questions. Virtual currencies, including those used for mobile apps, can be very profitable. It’s not legal advice: for that, we suggest you consult legal counsel.Ĭan the IRS tax virtual currencies for mobile apps? Does the NSA really play World of Warcraft to fight terrorism? ( Yes, at least they did.) Are cybercriminals using virtual currencies to launder money? Disclaimer: This material is intended for general information purposes only.

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