Cryptocurrency enthusiasts around the world were on the cloud nine when they heard that Starbucks which is the favorite coffee shop for most coffee lovers worldwide has backed the upcoming Bakkt exchange and might start accepting bitcoin payments at their outlets worldwide. However, the adoption of cryptocurrency payments could prove devastating for consumers due to tax-related issues.
Starbucks and Cryptocurrency:
Back in August 2018, Starbucks was in the news for being one of the backers of the upcoming Bakkt cryptocurrency exchange which is especially focused on bringing institutional investors into the cryptocurrency space. Recently, a few days back, it was revealed publically that Starbucks had acquired a good amount of equity in the upcoming Bakkt project and thus the coffee chain might just start accepting cryptocurrency payment in collaboration with the Bakkt Exchange. Such adoption could really mean a lot for the overall crypto community as Starbucks is one of the largest coffee chain and has over 28,218 stores worldwide as of 2018. This could result in other big food chains such as Mcdonalds or KFC also following Starbucks on the same. However, after a better examination, there are a number of factors which could make it difficult and very complex for Starbucks as well as the internal revenue services.
How does paying by crypto make a difference?
Make the payment for your coffee through bitcoin seems to be a simple concept as it just sounds like paying with a credit card or a digital wallet. However, taxes are the main concern here that make the most of the difference. According to the rules of the IRS or Internal Revenue Services, all the cryptocurrency payments (small or large) shall be directly reported to the IRS in order for them to calculate the profit or loss on the transaction and further calculate the tax on it. The laws related to cryptocurrencies are quite complex thus making it difficult for large companies to adopt cryptocurrency payments.
As Starbucks is a large company and deals with millions of clients every day, the number of transactions is huge. Even if a small portion of the total transactions is made in cryptocurrencies each day, it would still result in thousands of transactions to be reported to the IRS every day. This process would prove to be a headache for the company as well as for the users. Apart from this, the continuous change in the price of cryptocurrencies due to the volatility in the market is another reason why Starbucks might just back out of crypto adoption for the time being.