Feasibility Of Blockchain-Based Loyalty Programs For Businesses, Report Launched

While blockchain technology makes loyalty programs based on cryptocurrency feasible, Steven Wright's new report underscores the need for businesses to carefully examine applicable regulations before implementation.

More information can be found at https://www.drstevenawright.com/

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 Steven Wright notes in his latest report, 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, crypto loyalty tokens would likely face the same treatment, the report explains.

Steven Wright notes that unexpected tax implications present a major risk - both for companies creating and 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 the issuing company. 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."

Interested parties can learn more at https://www.drstevenawright.com/blockchain-loyalty-programs/

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