While you were having breakfast paying for your coffee and bagel in fiat, Starbucks and Bakkt, were announcing their partnership to allow customers to use Bitcoin as an accepted form of payment at chains across the United States.
The excitement over the potential for one of the worlds most recognizable coffee brands, to accept the world’s most popular cryptocurrency, can mean a lot of things – some good and some yet to be fully realized.
For the few people that own Bitcoin, and frequent Starbucks, this is something to look forward too. But, for those who believe that Bitcoin will trailblaze into the mainstream arena as a legitimate currency, this can be game-changing. Yet, most people don’t realize that behind the scenes, there are invisible gears turning that may make this implementation of Bitcoin payments at a company like Starbucks, almost impossible to adapt. The reason is simple, the IRS says every Bitcoin transaction is a taxable event.
The current view on Bitcoin from the Internal Revenue Service (IRS), classifies the digital currency as a store-of-value or property – and not a true form of currency. This means companies receiving Bitcoin must pay taxes on the gains and losses that occur at the originating transaction until the coins are finally sold.
For most people, this is something they would ever think to consider, but for accountants, bookkeepers, finance teams and c-suite executives, this is a worrisome debacle. This is because every single Bitcoin transaction would effectively require the tracking of gains vs losses with the fluctuating value of Bitcoin. This would be used for taxes, crypto accounting, and general reporting purposes. But, a failure to report gains or losses can, and has, been considered tax evasion.
Moreover, any company that retains Bitcoin for any length of time, would have to reclassify that coin as an asset, according to the IRS. This means it would have mandatory inclusion on company balance sheets – recording every single microtransaction. Every microtransaction would require deep and sophisticated tracking for an asset class most people don’t even know how to purchase, let alone account for.
Now while the fate of this potentially game-changing announcement is unknown, one thing is clear. There is an entire area of mainstream use cases for cryptocurrencies that can’t be explored due to lack of automated, effective and precise crypto tracking tools.
This is why Blox developed our platform and dedicated it to solving this emerging industry challenge for today and the future of cryptocurrencies becoming universally accepted as a legitimate form of currency.
Blox – a platform you can count on.