Starbucks Wants to Accept Bitcoin (BTC), But There May Be a Problem


News dropped last August that Starbucks (SBUX) was partnering with Microsoft (MSFT) and Intercontinental Exchange (ICE), the parent of the NYSE, to launch Bakkt, a new cryptocurrency exchange designed for institutions.

At the time, it was widely speculated that Starbucks would soon begin to accept bitcoin (BTC) as a form of payment, but the idea was soon quashed by insiders familiar with the matter.

However, a recent report by The Block indicates that Starbucks stores are set to install Bakkt software this year in return for a significant equity share in the exchange. The coffee stores will utilize the exchange functionality to spot trade bitcoin at the time of purchase with no actual custody.

While this may sound like a major step towards mass adoption, some have raised concerns over the tax implications this exchange system might bring.

“If you were to use bitcoin to buy coffee, it is technically feasible, but it would be extremely burdensome for tax purposes,” Coin Center Senior Research Fellow James Foust recently explained to MarketWatch. “You’d need to work out the fair-market value [of a bitcoin] at the time [of a coffee purchase] versus the fair-market value [at tax-filing time], and you’d need to itemize the gains or losses. If you realized 40 cents on the gain, you’d need to pay a few pennies.”

As one might imagine, this type of constant monitoring of capital gains and losses could result in significant headaches. However, Starbucks does seem set on being a leader in driving consumer adoption of digital payments.

Previous vice president of partnerships and payments for Starbucks, Maria Smith, said during the initial Bakkt announcement that “Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into U.S. dollars for use at Starbucks.”

While it’s unclear if Starbucks and Bakkt are developing any novel solutions for this taxation issue, Coin Center has previously detailed how the IRS can fix the problem. In a nutshell, the proposal suggests the IRS create a de minimis exemption for digital currencies, similar to what exists for foreign currencies.

Either way, 2019 is looking like it will be a big year in terms of adoption as major institutions and now the largest coffee chain in the world are all planning ways to integrate digital currencies into their products and platforms.

More: Bitcoin taxation is broken. Here’s how to fix it.

Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts

Pac-Man Arrives on the NEM (XEM) Blockchain

The arcade¬†classic Pac-Man has finally arrived on the blockchain thanks to¬†NEM¬†(XEM), a cryptocurrency project building a network designed…