Digital tokens represent ownership of digital assets. For this policy, we discuss digital tokens narrowly as a type of digital asset classified into two categories: fungible and non-fungible. Virtual currencies, including cryptocurrencies, are fungible digital assets that are exchangeable, interchangeable, and indistinguishable from other token units, as traditional forms of money are. Non-fungible tokens are unique, non-interchangeable digital assets that represent claims or receipts on digital or non-digital objects with value.

For SSI purposes, retained virtual currencies and other digital tokens are countable resources to the extent that a person can convert them to cash and use them for their support and maintenance.

Terminology surrounding virtual currencies and digital tokens can vary depending on the source. For SSI purposes, use the following definitions.

1. 1. 

   Convertible virtual currency — A virtual currency that has an equivalent value in traditional currency. It can be digitally traded between individuals, used to purchase goods or services, or exchanged into U.S. dollars and other traditional or virtual currencies. Bitcoin is an example of a convertible virtual currency.

2. 2. 

   Digital tokens — For the purpose of this POMS section, digital tokens are a form of digital asset or cryptocurrency that represents ownership of digital items. They are classified into two categories: fungible and non-fungible.

3. 3. 

   Fungible digital token — A fungible digital token is one that is interchangeable with and exchangeable for another equivalent digital token and is divisible into smaller units. Fungibility applies to non-digital tokens and assets as well. For example, U.S. dollars are fungible non-digital tokens. You can exchange a $20 bill for another bill of equal value or for smaller bills that add up to $20; a $20 bill has the same value as any other $20 bill. Bitcoin and other convertible virtual currencies are examples of fungible digital tokens.

4. 4. 

   Non-fungible token (NFT) — NFTs are digital assets that signify ownership of a unique or scarce property that is not interchangeable with another token and cannot be divided into smaller units. Sometimes likened to digital certificates of ownership, NFTs usually are associated with digital property; however, NFTs can signify ownership of non-digital property as well. Examples of NFTs are rights of ownership or access to items like artwork, music, stamps, and videos. When a person owns an NFT, they technically own digital code that conveys or promises ownership of or access to property, and not the property itself. Most NFTs are purchased and exchanged using cryptocurrencies on digital marketplaces (e.g., OpenSea, LooksRare, Rarible).

Whether virtual currencies and digital tokens are countable resources depends on whether they may be converted to cash and used for the person’s support and maintenance.

Generally:

• •

  Convertible virtual currencies, such as Bitcoin, that can be readily exchanged into a currency with legal tender status or can be used to meet a person’s food and shelter needs are countable resources when retained, beginning the month following the month of receipt. These currencies are liquid resources for development and documentation purposes. The countable value is the U.S. dollar exchange value as of the first moment of the month.

• •

  NFTs are countable resources if they can be sold or exchanged for convertible virtual currency or currency with legal tender status. The value of an NFT is the U.S. dollar value as of the first moment of the month. For SSI purposes, NFTs are assumed to be non-liquid resources, absent evidence to the contrary. A resource is non-liquid if it is not in the form of cash and cannot be converted to cash within 20 workdays (see SI 01110.300A.1). However, given the volatility of virtual markets, the value can vary substantially from month to month.

• •

  Virtual currencies and digital tokens that can only be exchanged for virtual goods and services within a limited virtual economy are not countable resources. The most common type of digital asset in this category is in-game currency and non-transferable digital content in online games and applications. These items can be purchased with traditional money, but generally cannot be exchanged for legal tender or convertible virtual currency or otherwise be used to meet a person’s food and shelter needs.

Virtual currencies are not evaluated under income and resources rules in the same month; and any sale of virtual currencies or digital tokens is a conversion of a resource from one form to another. See SI 00830.102 for evaluating virtual currencies under income rules and SI 01110.600B.4 for general information on making resource determinations.

1. How to develop and document convertible virtual currencies

Follow instructions in SI 00830.102C to document income determinations for virtual currency. To develop virtual currencies as resources:

1. a. 

   Request records from the person showing the balances in the person’s virtual account as of the first moment of the month for each month during the period of review. Evidence of virtual currency is recorded in digital wallets or accounts (e.g., Bitcoin wallet, Coinbase account). Examples of acceptable records include account statements and screen shots of account information. If there is no evidence available, accept the person’s allegation as to the value on a signed statement or report of contact.

   Note: 

   Many virtual currencies may not issue financial statements but the individual generally has the ability to generate and download a transaction history for a period of time and create financial statements.

2. b. 

   When the account records do not provide the balance converted to U.S. dollars as of the first of the month, use a currency converter that offers historical information to obtain the U.S. dollar value of the first of the month virtual currency balance and past month values, as applicable.

3. c. 

   Record the value of the convertible virtual currency in the “Other Resource” page in the SSI Claim path by selecting the “Other” category and entering a description (e.g., Bitcoin, cryptocurrency funds). For accounts containing multiple types of digital assets where use of a currency converter was necessary, you may record the account value on a single resource page, but you must document the file or a Report of Contact (e.g., DROC) with the first of month balances for each type of asset.

4. d. 

   Document the exchange value results obtained from the currency converter and store any additional evidence electronically using the Evidence Portal.

   -or

   Document the evidence and exchange value results on a Report of Contact (e.g., DROC).

2. How to develop and document NFTs

To develop NFTs as resources:

1. a. 

   Request records from the person that show the date of purchase, purchase price, and value of the NFT (e.g., blockchain or marketplace transaction records or digital wallet records). Not all blockchain networks or digital marketplaces offer the same level of detail.

   For the current month, use the:

   • •

     current best offer price, or

   • •

     listing price.

   If a current price is unavailable, then use the following generally in order of priority:

   • •

     historical values and past sale prices;

   • •

     30-day average values;

   • •

     current floor price or lowest active listing price.

   For a transaction month (i.e., a month in which an NFT was purchased or transferred), use the:

   • •

     historical values and past sale prices.

   If that information is not available, then use the following generally in order of priority:

   • •

     current best offer price or listing price;

   • •

     30-day average values;

   • •

     current floor price or lowest active listing price.

   For months other than the current month or a transaction month, use the following generally in order of priority:

   • •

     current best offer price or listing price as well as historical values and past sale prices;

   • •

     30-day average values;

   • •

     current floor price or lowest active listing price.

     When establishing the value of an NFT, particularly based on lower-priority evidence from these lists, allow the individual to provide additional evidence to rebut the value.

     NOTE: When an NFT is purchased with virtual currency or its value is expressed in virtual currency, use a currency converter to determine the U.S. dollar exchange value.

2. b. 

   Document the NFT on the “Other Resource” page in the SSI Claim system by selecting the “Other” category and entering a description (e.g., “NFT”).

3. c. 

   Document evidence of ownership and value and store it electronically using the Evidence Portal or on a Report of Contact (e.g., DROC).

   NOTE: When an NFT owner is also the creator of the NFT, develop for potential self-employment income and royalties following policies in SI 00820.200 and SI 00820.450. Royalites not earned as a part of a trade or business may be unearned income according to SI 00830.510.

• •

  SI 00820.200 Net Earnings from Self-Employment (NESE)

• •

  SI 00820.450 Royalties and Honoraria

• •

  SI 00830.102 Evaluating Virtual Currencies for SSI Income Determinations

• •

  SI 00830.510 Royalties

• •

  SI 01110.001 Role of Resources

• •

  SI 01110.100 Distinction Between Assets and Resources

• •

  SI 01110.300 Determining the Liquidity/Nonliquidity of Resources

• •

  SI 01120.005 Distinguishing Resources from Income

• •

  SI 01130.000 Resources Exclusions

• •

  SI 01140.010: Resource Verification Requirements

• •

  SI 01140.022: High/Low Development Option for Liquid Resources