Legal & tax

1. What we are: a bailee, not an owner

The single most important structural fact about TCG Keepr is what it is not. We do not buy your cards. We do not take title to them. We do not hold them as inventory. We hold them as a bailee — a custodian in possession of property that belongs to someone else — under a bailment for mutual benefit, which carries a duty of reasonable care.

Framed as a warehouse, the relationship falls under UCC Article 7. That brings a set of default rules worth knowing about, because they cut both ways:

2. How title passes without the card moving

The instinct that ownership must follow possession is wrong, and usefully so. UCC §2-401 provides that title to goods passes "in any manner and on any conditions explicitly agreed on by the parties." Parties can agree that title passes on a ledger entry. They just have to actually agree, in terms that say so.

So the chain we implement is:

1. You deposit a slab            → you remain the legal owner
2. Keepr takes possession        → Keepr is bailee, not owner
3. Ledger records you as holder  → identifies who the bailee holds for
4. You and a counterparty trade  → title passes on commit, by prior agreement
5. Ledger updates the holder     → Keepr now holds that slab for the new owner
6. The card stays in its bin     → possession never changed hands at all

// Steps 4 and 5 are the same database transaction. Step 6 is the whole point.

Electronic agreement to all of this is ordinary: the federal E-SIGN Act and state enactments of the Uniform Electronic Transactions Act give electronic records and signatures the same legal effect as paper. A "click to accept this trade" is a real agreement.

A more robust version of this design would build the ownership record as an electronic document of title under Article 7, where transferring control of the record is the operative act and a holder by due negotiation can take rights in the underlying goods (§7-502). That is the direction a production system should go. It is a drafting decision, not a code change — the ledger already has the properties it needs.

3. What the ledger does not prove

Here is the failure mode that a well-built system invites you to overlook. Our ledger is append-only, hash-chained and internally consistent. It can prove, to a cryptographic standard, that a record has not been altered since it was written.

It cannot prove that the record was true when written.

UCC §2-403 is the governing idea: a purchaser acquires the title the transferor had or had power to transfer. A thief has no title and cannot pass any, so a buyer downstream of a theft can end up with nothing, however innocently they bought. There are important carve-outs — good-faith purchasers for value from someone with voidable title, and the entrustment rule where an owner entrusts goods to a merchant who deals in that kind of goods — but they are exceptions with edges, not a general safe harbour.

The practical consequence is that the strength of the system is set at intake, not at settlement. Settlement is easy. Knowing that the thing being settled was the depositor's to deposit is the hard part, and no amount of downstream cryptography fixes an unverified deposit.

4. Intake diligence and KYC

Diligence therefore scales with value. Running $500,000 provenance checks on a $12 card is theatre; running $12 checks on a $500,000 card is negligence.

Certification lookup deserves particular care in how it is described. Querying a grader's database and getting back cert 84021173 = 1999 Pokémon Charizard, PSA 10 tells you that a genuine slab with that number exists. It does not tell you that the object in front of you is that slab. Counterfeit holders carrying copied certification numbers are a known attack.

That is why nothing on this site says "authenticated" or "✓ verified" about a slab. The accurate phrasing — and the phrasing we use — is certification record matched against issuer records, which is exactly what was done and no more. The physical checks that go beyond that record match are described on the grading page: weld-seam inspection, slab dimensions, weight, label typography.

5. Tax: the part everyone gets wrong

Swaps are barter, and barter is income

The IRS treats bartered exchanges of property as taxable: you realise gain or loss measured against the fair market value of what you received. If you trade a Charizard you bought for $6,000 for a Blue-Eyes worth $20,000, you have a $14,000 realisation event in the year of the trade, and you did not receive a dollar of cash with which to pay the resulting tax.

Like-kind exchange does not save you

Before 2018, a card-for-card trade might have been structured as a like-kind exchange under IRC §1031 and deferred. The Tax Cuts and Jobs Act narrowed §1031 to real property. Collectibles no longer qualify. There is no deferral mechanism for a card-for-card swap, and anyone telling you otherwise is working from a pre-2018 mental model.

Collectibles are taxed at their own rate

Trading cards are generally collectibles for federal tax purposes. Long-term capital gain on collectibles is taxed at a maximum rate of 28% under IRC §1(h)(4) — not the 15% or 20% that applies to most long-term capital gains. Held a year or less, gain is ordinary income at your marginal rate. Whether you are a collector, an investor, or a dealer holding inventory changes the analysis again, and that classification is fact-specific.

Basis tracking is your problem, and we should make it easier

Every trade resets a basis. Because our ledger records the price of every fill and the marked value of every swap leg, we can hand you a complete transaction export — acquisition date, amount realised, fees — which is most of what a return preparer needs. What we cannot know is your basis in a card you acquired before you ever met us. Bring that with you.

Information reporting adds another layer. Third-party settlement organisations file Form 1099-K, and the reporting threshold for that form has been changed and re-changed repeatedly in recent years. Do not rely on any threshold you read on a website, including this one — check the current IRS guidance for the tax year in question. Note also that a 1099-K reports gross proceeds, not gain, so the number on the form is not your taxable income.

6. Sales tax and marketplace facilitation

Income tax is not the only exposure. State sales and use tax generally reaches transfers of title to tangible personal property for consideration — and states define that broadly enough to capture barter. California, for example, defines a "sale" in Rev. & Tax. Code §6006 to include any transfer of title for a consideration, and the CDTFA treats barter and exchange transactions as taxable, generally measuring tax on the value of what was received.

So the $20,000-for-$20,000 swap that produced no cash may still produce a sales tax liability on both sides. This is the least intuitive result in the whole product and the one most likely to surprise someone.

The sourcing problem nobody has a clean answer to

Zero-movement settlement creates a genuinely novel question: where does the sale occur? Sales tax is normally sourced to where the goods are delivered. But here:

• The seller may be in one state.
• The buyer may be in another.
• The card is in a vault in a third, and stays there.
• The card may never be delivered anywhere — the buyer may trade it away again from inside the vault, months later, without it ever moving.

Reasonable positions exist for sourcing to the vault's location, to the buyer's address, or to the point of eventual withdrawal. They give different answers and different rates. This is not a question to answer by intuition, and it is the specific reason a custodial marketplace needs a sales-tax specialist rather than an off-the-shelf tax API and optimism.

7. Payments: why there is no Keepr balance

There is a version of this product where you keep a balance with us — deposit money, leave it sitting, send it to another member, cash it out. It is a much nicer user experience. It is also how you become a money transmitter.

State money transmission laws generally cover receiving money for transmission and issuing stored value; California's Money Transmission Act is representative. That means licensing in most states you operate in, surety bonds, minimum net worth, permissible-investment requirements, examinations, and a compliance function. It is a serious business to be in, and it is not the business of keeping cards safe.

Card-for-card swaps are the cleanest transactions on the platform precisely because no money moves through us at all — the ledger changes two owner fields, and the only cash involved is a fee charged through the payment provider. The cash balance shown in the demonstration terminal is a simulation convenience, not a product commitment.

8. One slab, one owner

A deliberate product constraint: we do not fractionalise cards. No shares, no tokens, no "own 1/10,000th of a Black Lotus," no pooled funds, no lending, no yield, no derivatives, no managed portfolios.

The line matters. "Dominic owns this slab and transfers 100% of it to John" is a sale of goods. "Ten thousand people own tradable interests in a card that Keepr selects, stores and manages, in the expectation that it appreciates" has every element of the Howey test — an investment of money in a common enterprise with an expectation of profit derived from the efforts of others — and becomes a securities offering, with registration, disclosure and broker-dealer questions attached.

The right mental model for what this is: StockX plus a bonded-quality vault plus a title registry. Not a brokerage.

9. What "insured" means here

Insurance language is where custodians most often overstate, so here is the precise version.

• Valuation is contractual. How a loss is measured — declared value, market value at loss, replacement — is defined by the policy, and those can produce very different numbers for a card whose price moved.
• Aggregate limits are shared. A per-item cap does not mean the policy pays that cap on every item simultaneously. A total-loss event tests the aggregate.
• Pre-existing condition is excluded. This is what the four calibrated intake captures are for: they establish the condition of the item on arrival, so a claim turns on evidence instead of argument.
• We do not sell you insurance. We carry coverage on our own custodial operation. Soliciting, negotiating or transacting insurance for customers is a licensed activity in every state, and it is not something we do. The declared-value coverage line on a ship-out quote is carrier shipping coverage priced into the shipment, not an insurance product sold by us.

10. Marketplace obligations

Once users can list and sell to each other, the platform is an online marketplace and picks up obligations that have nothing to do with cardboard.

The federal INFORM Consumers Act requires online marketplaces to collect and verify bank account, contact and tax identification information from high-volume third-party sellers, to disclose certain seller information to buyers, and to provide a reporting mechanism for suspicious listings. The FTC has begun enforcing it. None of this is unmanageable, but it has to be designed into the account and KYC infrastructure rather than bolted on once someone crosses a threshold.

Advertising claims are the other standing obligation. Under FTC rules, objective claims must be truthful and substantiated, and what matters is the overall impression an advertisement creates — not whether a qualifier appears somewhere in the fine print. That principle is why several numbers and phrases on this site are written the way they are: a stated accuracy percentage would require real measured data behind it, so this site states what the process is — four calibrated captures per item — rather than how often it succeeds.

11. Segregation and insolvency

The question a serious depositor should ask any custodian: if you go under, what happens to my card?

The answer has to be that it was never ours to lose. Customer cards are customer property held in bailment — not platform inventory, not an asset on our balance sheet, and not available to our creditors. Making that stick is a matter of doing the unglamorous things consistently:

• Physical segregation. Customer property is stored separately from any company-owned inventory, in identified locations.
• Records that identify owners at all times. Every slab maps to exactly one holder, continuously, with a hash-chained history — so reconstructing who owned what on any given date is a query, not a forensic project.
• No rehypothecation. Customer cards are never pledged as collateral, lent, or used to secure company borrowing. This should be an express covenant in the custody agreement, not a policy that can quietly change.
• No commingling of funds. Which is another argument for keeping money at a licensed provider rather than on our own balance sheet.
• Documentation that says all of the above. The agreement should make it painfully obvious to a court that these are bailed goods.

12. What the custody agreement has to cover

A custody agreement for this product is not a standard marketplace ToS with the word "vault" pasted in. At minimum it has to address every one of these, because each is a real scenario that will eventually arrive: