Should You Pay Your Employees In Cryptocurrency?

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The idea of paying staff in cryptocurrency is gaining a lot of traction as digital currencies enjoy mainstream adoption across the US and abroad. Many businesses are strongly considering this approach because of the benefits it holds, although it is not without risk.

Several high-profile businesses are exploring crypto salaries which allow employees to receive their wages as a digital asset of their choosing. Employers can also decide which currency to pay their staff in or discuss the options with employees. Although Bitcoin remains a top choice for many, stablecoins and meme coins are viable alternatives. The best meme coins to invest in, like Solaxy and Meme Index, are up-and-coming and can offer high returns for a low investment. Stablecoins, on the other hand, are less volatile but can result in lower payments than when compared to Bitcoin, Ethereum, or meme coins.

Benefits of Paying Staff in Crypto

There are several benefits to paying staff in cryptocurrencies, to both the employer as well as the employees.

Lower transaction fees

Crypto transactions typically have lower transaction fees than bank transfers or card payments, which can contribute to company savings. This is especially beneficial to companies who often have to make cross-border payments and deal with international transfer costs.

Acquire and retain top talent

Companies that offer crypto salaries are more likely to attract innovative thinkers and employees who understand the long-term value of crypto. The job market is highly competitive and offering this as a salary option will make a company stand out and acquire top, forward-thinking talent.

The young workforce is seriously investing in crypto, and with many brilliant minds emerging from schools and colleges each year, a company will do well by offering these young talents crypto payment opportunities.

Combining crypto and traditional payments allows companies to retain a multi-generational workforce.

Tax benefits

Crypto payroll may offer tax benefits to a company, depending on local tax regulations. However, it is best to consult a tax professional to ensure compliance with laws while reaping tax benefits.

Faster transactions

Employees will be able to access their salaries almost instantly since crypto transactions take a couple of minutes to complete. It also benefits companies that can avoid the Automated Clearing House (ACH) deposit process or writing physical checks.

Meet personal preference

There are thousands of different types of cryptocurrencies, from the popular Bitcoin, Litecoin, and Ethereum to meme coins like Catslap or Wall Street Pepe. This allows companies to pay employees according to their preferences, giving them more control over their finances.

Potential massive gains for staff

Many cryptocurrencies are highly volatile and can jump significantly in value over the course of a single day. Although this comes with risks, employees may potentially benefit from these gains should the value of their chosen crypto rise after payday.

Risks of Paying Staff in Crypto

It is important that companies also weigh up the potential risks and challenges involved when paying employees in crypto.

Infrastructure requirements

Crypto payments are more intricate to set up than an existing payroll system. Companies must have a solid technological system to implement payments, especially if these systems must be integrated with existing payroll systems. The company must maintain reliable infrastructure to ensure smooth and secure payments.

Employees not on board

Although some employees may prefer to be paid in a digital currency, it is unlikely that all staff will be on board in a large company with older staff members. The unfamiliarity associated with crypto can be a deterrent for some, and companies may have to implement both traditional and crypto payment systems to keep everyone happy.

Regulatory landscape

Businesses must consider both federal and state laws when it comes to salaries. The Fair Labor Standards Act has the requirement that wages must either be paid in cash or a “negotiable instrument payable at par”. That means that under this act, bonuses can be paid in crypto, but base wages must either be paid in US dollars or equivalent.

There are also state-specific laws to consider. For example, Illinois and California have laws that can make it challenging to pay staff in crypto, while in New York the Department of Labor prohibits crypto salary payments.

IRS considerations

Companies and employees must also take IRS regulations into consideration. All income received as crypto is taxable, but employers can simplify the process by paying staff in US dollars and providing them the option of converting their paychecks into crypto. This is a safe bet as it can avoid the issues that may arise due to the volatile nature of crypto. Sudden drops in value can result in minimum wage issues if not properly managed.

Volatility

Although crypto volatility can benefit employees, it can also result in the employee getting less than their agreed-upon salary should the price drop after payday.

Security concerns

The decentralized nature of cryptocurrency means that there is little to no government oversight. This makes it attractive to hackers or scammers. Those getting paid in crypto also won’t enjoy the same level of consumer protection as those receiving traditional salaries.

Industries That Should Consider Crypto Payroll

Some industries are better suited than others to pay their staff in crypto:

Technology companies: These companies tend to attract staff who are aware of and interested in crypto.
Freelancers: Freelancers often deal with clients from across the world. Accepting crypto payments means they can avoid lengthy payment times and expensive transaction fees.
Startups: New companies, especially in the blockchain and tech industries, will attract a lot of interested (potential) staff members by offering crypto payments. Startups can be risky, and employees will be more at ease when there is growth potential in their payments.
International companies: These will find it less complex to perform crypto payments as there is no need to deal with international bank payments.

Final Thoughts

A few years ago the idea of receiving a salary in Bitcoin or Dogecoin would have felt like the most bizarre concept, but today it is our reality.

Answering the question, “Should I pay my employees in crypto?” is complicated, as it depends on the nature of the company, the willingness of the staff to accept crypto payments, as well as local regulations.

Crypto salaries hold many benefits to both employers and employees, but there are also risks associated with digital assets. However, since crypto is clearly here to stay and more countries are considering digital local currencies, it does not seem too outlandish to start paying employees in a cryptocurrency of their choosing.