Coinbase Introduces “Coffee Days” Initiative to Facilitate $1 USDC Stablecoin Transactions at Cafés

Stablecoins are gaining traction, emerging as one of the most prevalent methods of cryptocurrency payments to date.

This trend is underscored by major payment service providers such as Stripe recently announcing their support for USDC.

Additionally, the overall market capitalization of stablecoins currently exceeds $164 billion, reflecting a 26% increase since the start of the year.

Coinbase Collaborates with Coffee Shops to Facilitate USDC Payments

In light of the increasing popularity of stablecoins, it is not surprising that new payment applications are starting to surface.

Recently, cryptocurrency exchange Coinbase introduced “Coffee Days,” an initiative aimed at enabling USDC payments at local coffee shops globally.

Chintan Turakhia, Senior Director of Product Management for Coinbase Wallet, informed Cryptonews that during Coffee Days (which will continue until the end of August), participating shops will provide $1 cold brew or iced latte drinks when customers pay using USDC through the Coinbase wallet.

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“Customers at participating coffee shops can claim a complimentary cup of coffee by engaging onchain,” Turakhia stated. “Drinks are priced at $1 when customers utilize USDC at these coffee shops.”

USDC Payments at Coffee Shops May Encourage Adoption

At present, there are 10 coffee shops involved in Coffee Days – primarily located in the United States, Toronto, and Berlin – but Turakhia indicated that additional shops may join in the future.

“The aim of this initiative is to simplify and enhance the experience for users paying with USDC through the Coinbase wallet,” he added. “We visit coffee shops frequently, and now we are empowering both customers and merchants to accept USDC on Base to promote adoption.”

Source: Coinbase

Turakhia further noted that while using USDC may be unfamiliar to some consumers, he believes the Coffee Days initiative makes the process straightforward and akin to paying with a conventional credit card.

“There is attractive signage in all participating shops featuring a QR code that states ‘dollar coffee all summer long,’” he explained. “Users scan the QR code to claim the free coffee. They can then purchase $1 drinks through the Coinbase wallet using USDC payments. They can simply tap the point of sale system at the register or scan a QR code to complete the payment.”

Although there are minor transaction fees (gas fees) linked to USDC payments, Turakhia mentioned that Coinbase absorbs these costs.

“One of the reasons we emphasize stablecoin payments is that they resemble the U.S. Dollar and the currency merchants are already accustomed to receiving, as opposed to something volatile like Bitcoin or Ethereum payments,” he remarked.

Coffee Shops Accepting Crypto Payments Is Not a Novel Idea

Even though Coinbase initiated its Coffee Days program on August 8, the crypto exchange has previously collaborated with coffee shops.

In March of this year, Coinbase announced a partnership with Compass Coffee in Washington D.C. that allowed the shop to accept USDC payments. It is not surprising that Compass Coffee is also part of the Coffee Days initiative.

The coffee chain giant Starbucks has also revealed support for Bitcoin (BTC) payments in crypto-friendly areas such as El Salvador. In 2022, Starbucks launched its own non-fungible tokens (NFTs) as part of a rewards program. However, the multinational coffee chain discontinued its NFT rewards program in March of this year.

USDC Payments Provide Transparency for Merchants and Consumers

While it is premature to assess the success of the Coffee Days initiative, the advantages of USDC payments may gain traction.

For example, all transactions conducted on Coinbase’s Base network are transparent and direct, which can benefit local merchants in various ways.

Wade Preston, the owner of Prevail Coffee in Montgomery, Alabama, told Cryptonews that accepting USDC payments as part of Coffee Days can help establish a direct connection between customers and coffee growers.

“Instead of a portion of every sale going to intermediaries, it goes directly and transparently to our coffee growing partners like Marco and Maricella Oviedo in Costa Rica,” Preston stated. “Programmable money, such as USDC on Base, eliminates a transactional barrier and replaces it with a genuine connection point that strengthens local and global communities.”

Indeed, utilizing blockchain technology can assist coffee merchants in creating a more directly sourced supply chain, enabling customers to understand the origins of the coffee beans.

Tax Considerations Related to USDC Payments

Although USDC payments may be gaining popularity, it is crucial for both businesses and consumers to recognize that crypto payments are considered taxable events.

Jonathan Bander, managing partner and head of tax strategy at ExperityCPA – a tax and accounting firm specializing in cryptocurrency – informed Cryptonews that when using USDC to buy a coffee, those transactions are taxable under U.S. law.

“This implies that you may need to report any gains or losses based on USDC’s value at the time,” Bander explained. “Even though USDC is pegged to fiat currencies and remains relatively stable, it still must be reported for tax purposes.”

Bander highlighted that this differs from regular U.S. dollars, which do not necessitate special reporting.

“USDC is classified as property,” he stated. “Therefore, any gains or losses from purchasing or selling a coffee with USDC must be reported on Schedule D of your tax return. Schedule D assists you in tracking these gains and losses.”

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