In this guide, Steven Wright, the engineer, lawyer, professor, and entrepreneur, covers everything you need to know about blockchain customer reward programs and their feasibility in today’s environment.
If you’ve been considering a blockchain-based customer rewards program for your business, you’re not alone. But there are a few things to consider that you might not have thought of – and getting the setup right will be key to adoption and success.
Steven Wright is a blockchain expert, and his report underscores the need for you to carefully examine applicable regulations before implementation.
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Customer loyalty programs have been around for centuries, with early origins tracing back to the 1700s and 1800s when suppliers would issue tokens that could later be redeemed for rewards. As the author notes, there are parallels between these traditional loyalty programs and modern frequent flyer miles, which are sometimes treated as a pseudo-currency yet remain taxable by the IRS under certain conditions.
With the IRS increasing enforcement of cryptocurrency transactions, some businesses have proposed crypto loyalty programs as a way to avoid tax complications and queries from the IRS. But just as accrued frequent flyer miles have been deemed taxable by the IRS in certain cases, any crypto loyalty tokens you create would likely face the same treatment, the expert explains.
Steven Wright notes that unexpected tax implications present a major risk - both for you and for consumers using crypto loyalty programs. If the IRS were to retroactively tax loyalty tokens, it could significantly decrease their perceived value and hamper adoption, raising questions over the viability of the programs.
As a way to overcome this, Steven Wright advises structuring crypto loyalty programs to more closely resemble traditional ones, where earned tokens are non-transferable and only redeemable for specific rewards through your business. With tokens tied directly to physical rewards, the likelihood of aggressive IRS taxation diminishes.
Steven Wright is an established expert on blockchain and emerging technologies. He regularly shares his insights through articles, guides, books, and online courses. In 'Ethics, Law and Technology Adoption,' his recently published book, he explores the responsible and ethical implementation of new technologies like blockchain - while a recent Udemy course focuses on mastering perspective for problem-solving.
He states: "Blockchain-based customer loyalty programs are not impossible; however, due diligence needs to be undertaken with the applicable regulations, to ensure the loyalty program is designed appropriately."
If you’re considering a blockchain-based loyalty program, this guide is important to read. Give it a look today!
Check out https://www.drstevenawright.com/blockchain-loyalty-programs/ for any extra info you need!