Dive Brief:
- LVMH-owned watch retailer Tag Heuer announced Thursday that it would start accepting cryptocurrency payments on its U.S. website, according to a press release.
- Tag Heuer now accepts 12 cryptocurrencies through BitPay, including Bitcoin and Dogecoin, and allows crypto transactions of up to $10,000.
- “As an avant-garde watchmaker with an innovative spirit, we knew TAG Heuer would adopt what promises to be a globally integrated technology in the near future despite the fluctuations — one that will deeply transform our industry and beyond,” CEO Frédéric Arnault said in a statement.
Dive Insight:
Tag Heuer's announcement comes as other LVMH brands and rival luxury fashion houses at Kering are investing in the metaverse and Web3, which is the concept for a new stage of the internet relying on blockchain technology.
Two brands owned by Kering announced they would start accepting crypto in some capacity this month. Balenciaga will soon start accepting Bitcoin and Ethereum as payment at its flagship U.S. stores and online, as reported by Women’s Wear Daily. Earlier this month, Gucci announced it would start accepting crypto as payment in select U.S. stores. The luxury brand even announced it would complete crypto returns in crypto, as opposed to offering store credit like the brand Off-White.
As Arnault alluded to, cryptocurrency fluctuations are a risk companies will need to take on if they allow this form of payment. This month, cryptocurrency had one of its most volatile trading weeks in the past two years. The TerraUSD coin collapsed, falling below the $1 peg despite it being deemed a stablecoin. Last week, Consumer Financial Protection Bureau Director Rohit Chopra cautioned businesses, telling Bloomberg that stablecoins might not be ready for payment.
Accepting crypto means a business needs to be prepared for logistical situations like handling refunds for uniquely irreversible crypto transactions and dealing with capital gains taxes. Larger luxury retailers who handle fewer transactions with higher prices are likely more equipped to pilot such payments.
Despite that, not all companies that handle large-dollar transactions have succeeded in crypto payments. Tesla stopped taking crypto payments last May citing environmental implications. The announcement came as news swirled regarding the tax implications for customers liquidating their coins. Soon after Tesla stopped taking crypto, the U.S. government announced that crypto transactions of $10,000 or more need to be reported to the IRS for review of suspicious activity — something only cash payments previously required.
Luxury brands like Gucci have also set their sights on technology like non-fungible tokens. Over the past year, Gucci has launched NFT collaborations with artist groups like 10KTF and Superplastic.
While brands under LVMH and Kering are moving full force into the metaverse and blockchain technology, luxury brand Hermès has stayed more conservative with its digital involvement. The retailer filed a cease and desist with an artist over their NFTs called “MetaBirkins”, starting a legal debate on trademark infringement in the metaverse.
During a shareholder meeting in April, Hermès CEO Axel Dumas expressed limited interest in the metaverse.
“For the time being, we’re interested to see how this world evolves and changes,” Dumas said during the call, according to multiple media reports. “But this is not a priority of ours. We’re mainly interested to learn and monitor, rather than rush into the metaverse."
