Starbucks accepts crypto: what it means for your treasures
Bitcoin is accepted by what is undoubtedly the premier coffee industry, should be a win for crypto competition. In the early days, the vision of using coins in a number of businesses was actually the currency of life's movement.
Backing is expected to start later this year, giving sellers a simple crypto-fiat solution to accept encryption payouts without having to deal directly with them. Developed by the market's heavyweight and the New York Stock Exchange parent, the Intercontinental Exchange (ICE), and with a Starbucks partnership, there is little doubt that Bakkt will make significant progress in pushing cryptographic curves to the masses.
Ten years on the realization of this milestone has been somewhat anti-climatic. As Bitcoin evolved, it became subject to unclear tax regulations that reduced its use as a daily currency. As it says, IRS treats cryptocurrencies as real estate, meaning any disposal (fiat trading, trading for other cryptographic baskets or expenses) triggers a taxable event.
Tax rules alone will seem problematic for Bakkt customers. Tracking every payment of a few dollars for a coffee to later calculate your profit / loss will be inconvenient to a point where individuals will likely favor cash or card transactions.
On Bright Side
Although the prospect of mass approval of Bitcoin As currency seems slim in light of tax regulations, it may be preemptive. As an emerging network with little precedent to compare it, it is quite possible that the regulatory framework softens to account for weak dollar value fluctuations due to market volatility.
The de minimis exemption, which applies to foreign currency, can be a viable way forward ̵[ads1]1; in simple terms, it allows money held in a foreign currency to acquire any gains tax if the exchange rate in that currency increases slightly before it becomes used (below a certain threshold). The idea that this type of exemption can be applied to bitcoin used to buy goods or services is pursued by the cryptocurrency advocacy organization Coin Center, which works to educate and lobby regulators where digital money is concerned.
Another development that is worth following in this vein is the Token Taxonomy Act, which was first proposed in December and is now in the process of withdrawing. Presented by Congresses Darren Soto (D) and Warren Davidson (R) in a bill at the end of 2018, it would change both the 1933 Securities Act and the 1994 Securities Trading Act for a more convincing treatment of blocked tokens and cryptographic baskets.
As a possible de minimis exemption, "other than cash" equivalent transactions will be excluded from tax, provided they do not exceed $ 600 – unless a person intends to buy 100+ coffee from Starbucks, they would not trigger a taxable event.
Moving Forward
It is important to keep these developments in perspective. New regulatory treatment of crypto inverters would be a blessing to ordinary adoption, but it does not address the problem at the core.
Regardless of the exceptions, an audit trail is still of utmost importance – after all, one will still have to prove that their coins were disposed of in a way that does not incur taxes. The easiest way to create a transparent record of transactions is to rely on software solutions to automate the headache process of logging, aggregation, and tax calculation at the end of the tax year.
Cryptocurrency is crawling towards an explosion in mainstream interest with every passing day. As regulations adapt to recognize this, the digital currency law that Satoshi Nakamoto proposed over a decade ago is still critical.
About the authors
Sean Ryan and Perry Woodin are the founders of NODE40. NODE40 Balance is a robust cryptocurrency reporting software that integrates directly with large encryption exchanges. Members of the blockchain community acting in, trading or mining digital currency have probably triggered a taxable event and may not be aware of how to properly convey these transactions to the state.
