As Coinbase engages in a legal dispute with Gary Gensler and the Securities and Exchange Commission, the focus of the Internal Revenue Service has shifted towards NFTs.

On Tuesday, the IRS issued a statement revealing that it is deliberating on the taxation of NFTs, viewing them similarly to other collectibles such as gems or artwork. This marks the agency’s first effort to establish a clear taxation policy for NFTs. As collectibles are subject to higher tax rates than other assets when sold after a year, the outcome of this decision could have significant implications for the industry as a whole.