Experts believe Starbucks plans to enter the financial services industry. This belief is based on the huge sum of money Starbucks holds in stored value card liabilities and Starbucks’ investments in crypto. It also removed the word coffee from its signboard.
Billions in value card liabilities
Starbucks customers generate a massive amount of money purchasing Starbucks gift cards and putting money on the Starbucks app. According to Yoon Jong-kyoo, chairman of KB Financial Group, “The most used mobile payment app in the US was the Starbucks app, not Google or Apple Pay.” Starbucks’ 2018 annual report shows $1.6 billion in stored value card liabilities. Stored value card liabilities are money Starbucks customers loaded onto gift cards and the Starbucks app and have not spent.
Experts say this amount of cash will enable Starbucks to expand its presence into the asset management, currency exchange, loan and insurance markets. According to Hana Financial Group Chairman Kim Jung-tai, “Technologies have allowed coffee companies like Starbucks to be our rivals. It will be fine to call Starbucks an unregulated bank, not a mere coffee company.”
Significant investments in crypto
In addition to this influx of cash, Starbucks has made significant investments in the crypto industry. One of these investments is a partnership with Intercontinental Exchange Inc. on their app Bakkt – a consumer app for digital assets like Bitcoin. Once developed, the app would allow Starbucks customers to purchase a cup of coffee with Bitcoin. The app is set to launch in the first half of 2020, with Starbucks as the first launch partner.
With billions in cash, strategic crypto investments and subtle moves away from the word “coffee” should Starbucks be considered an unregulated bank? And if so, should it be regulated in the same way banks are?
The IRS’s response
The IRS has yet to respond to these moves by Starbucks, but it has expressed its opinions on crypto. According to IRS Criminal Investigation Chief Donald Fort, crypto is a concern for tracking illegal money.
And it’s no surprise the IRS is ratcheting up enforcement on crypto. See the latest updates to IRS crypto tax enforcement.