A store decided to issue a prepaid card that can be loaded with cryptocurrency and used only in that store.
Will the customers pay tax when they load the card, use it, or both?
I am interested in US law.
Acquiring cryptocurrency in any form, including on a prepaid card, is not a taxable event.
Whether income taxes are due when it is used depends upon the value of the cryptocurrency in question when the card is used. Of course, sales taxes would also often be due at some fixed percentage of the purchase price when using the card.
If the cryptocurrency goes up in value between acquiring it and using it, that is a capital gain. If it goes down in value between acquiring it and using it, that is a capital loss.