Apple’s new Coinbase NFT Shakedown will literally tax Ethereum trades and transfers on iOS

Coinbase tweeted this morning that Apple blocked the release of its latest crypto wallet app, asking for a cut in gas fees when people transfer NFTs to each other. Coinbase had to disable its NFT transfer feature before Apple would let the company update its popular self-managed wallet.

“Apple’s claim is that the gas fees required to send NFTs must be paid through their In-App Purchase system so they can collect 30% of the gas fee,” Coinbase so via its Coinbase Wallet Twitter account. “This is similar to Apple trying to take a cut of fees for every email sent over open Internet protocols.”

For once, it’s not PR hyperbole.

It is actually that serious.

While Apple charges a 15-30% commission on digital products purchased in iPhone apps, gas taxes are not in-app purchases. Rather, gas taxes are something like electricity. Just like you pay the electric company to keep the lights on, you pay gas fees for the privilege of changing records on the Ethereum blockchain.

They are essentially a small tax on transactions to keep the network running.

“Gas is essential to the Ethereum network,” says the Ethereum developer website. “It’s the fuel that makes it work, the same way a car needs gas to run.”

Although Apple is most concerned about NFTs here, the reality is that sending crypto through your Coinbase wallet – full disclosure, I use the Coinbase Wallet personally – usually requires the payment of gas fees. The same goes for exchanging crypto, for example if you want to exchange some of one cryptocurrency for another cryptocurrency. Which means, based on this app update blockade, Apple wants a tax on cryptocurrency trading on iOS apps.

Because, as CoinDesk puts it, gas fees are something all users must pay to perform a function on the Ethereum blockchain.

Repeat: any function.

“Apple’s claim is that the gas fees required to send NFTs must be paid through their In-App Purchase system so they can collect 30% of the gas fee,” Coinbase said. “For anyone who understands how NFTs and blockchains work, this is clearly not possible. Apple’s proprietary In-App Purchase system doesn’t support crypto, so we couldn’t comply even if we tried.”

This is just the latest example of Apple attempting to control all commerce on mobile apps for its iPhone and iPad products.

Most likely, this is simply a mistake by a low-level employee on the Apple app review team who doesn’t understand crypto or NFTs, and Coinbase understands that, adding “we hope this is an oversight on Apple’s behalf and a turning point for further conversations with the ecosystem … Apple, we’re here to help.”

Commentators find it most likely, including Oleg Fomenko, the co-founder of Sweat Economy, which offers the Sweatcoin app and Sweat Wallet.

“I think you should go back and explain this again. It is likely that they have misunderstood gas taxes to buy NFTs,” he black. “We went through 28 days of ‘on and off’ and finally it boiled down to us explaining that users cannot buy NFTs in Sweat Wallet.”

However, while it is in place, the ban makes it impossible for people who own crypto and NFTs in their personal Coinbase wallets on iOS to transfer their NFTs. And it threatens the ability to send NFTs or cryptocurrency in any app on iOS, or to exchange one cryptocurrency for another, at least where gas taxes are concerned. It also makes it challenging for companies to innovate in the space when the brakes on invention are held up by people analyzing their apps for opportunities for Apple to make more money.

In related news, Meta CEO Mark Zuckerberg said this kind of control over the mobile ecosystem is not sustainable.

“I think Apple has kind of set itself apart as the only company that’s trying to control, unilaterally, what apps go on the device, and I don’t think that’s a sustainable or a good place to be,” Zuckerberg told The New York Times’ Dealbook conference (via Axios).

I’ve reached out to Apple for comment, and will update this story if the company responds.