Can you pay your employees in crypto?

As cryptocurrencies continue to expand and become more prominent in the global economic market, an increasing number of companies are starting to invest in crypto and use it as part of their daily business plan. Business models are increasingly relying on aspects of crypto to function, and this includes how they pay and compensate their employees. Whilst this may have seemed a million miles away just a decade ago, paying workers through Ethereum and Bitcoin has now become part of widespread HR policy. But how legal is it, and is it practical for companies to start widely adopting this sort of payroll?

Crypto Has Become Widespread 

Major companies have started to adopt the use of crypto in their transactions. This has seen the likes of Microsoft, Shopify and AT&T all implement different kinds of crypto policies into their business models. The decentralized nature of cryptocurrencies, along with the rapid transactions and low fees globally, makes it particularly appealing for some companies. 

Whilst the more widespread adoption through sectors of industry has been fragmented, the online casino industry and iGaming industry have been a particularly strong cheerleader for the adoption of crypto for some time. Online casinos benefit from the quick deposits and withdrawals that can be made using crypto payments. The privacy and transparency of the blockchain on which crypto operates are also appealing to many users on online casino platforms, which makes them even more appealing. The market has become so extensive that selecting which casino to use can be hard, but the likes of cryptocasino.guru can be useful for identifying the right platform for you.

The normalization of crypto on mainstream platforms and within whole industries has allowed it to blossom and makes it an increasingly attractive option for businesses to use within their salary payment schemes. 

The Legalities

For many businesses, the most off-putting part of crypto is the legalities behind it. In many countries around the globe, there are laws in place that companies must adhere to and one of the kingpins of these policies is that employees are paid in legal tender. Whilst this does make using crypto for payments to employees a bit of a gray area, it does not prohibit the use of it in the payrolls of businesses. 

In the US, for example, there is a clear distinction in their fundamental Fair Labor Standards Act, which details that Full or Part-Time workers contracted in a position must be paid in fiat currencies to comply with tax regulations. The same does not apply to freelance workers or contractors, where the rules and regulations around this are more lax and allow for the scope of crypto payments. 

The difference in the law is also dependent on which state you are in in America, or which country you are residing in around the world. California and New York have much more stringent state labor policies, which would make crypto payments to employees more dubious and maybe verging on non-compliant. Doing your research into local and domestic policies on crypto is imperative before you look to implement any changes. 

Volatility of Crypto

One of the biggest things that puts people off crypto in general is its extreme volatility. The price volatility of cryptos can change up to 10% on any given day. This presents problems when looking to pay people in a salary-based format due to the ever-changing nature of these currencies. The risk to the employer is that companies will promise to pay their employees a given amount of Bitcoin each month, but the price of Bitcoin skyrockets at the end of the month compared with the start of the month. This change could pose an expensive problem for the employer. Likewise, the same could happen on the inverse for the employee who could see their salary significantly drop over a month. 

In a bid to tackle this kind of volatility, businesses have started to use Stablecoins, which are pegged to traditional fiat currencies such as the US Dollar. Whilst there is still some market volatility with these kinds of coins, there is much less chance of huge changes and business can be more assured when using cryptocurrencies whilst also reaping the rewards these unique assets offer. 

Practicalities

Careful thought and consideration are required if you are looking to pay employees through cryptocurrencies, but it is not impossible. 

1. Consider your payroll providers:

Most traditional payroll providers have not embraced cryptocurrency capabilities yet. Instead, consider looking at new emerging platforms such as btwage and Deel, which offer specialty payrolls designed for crypto. 

2. Wallets

Employees will need to establish crypto wallets for the payments to happen. Ensuring that your workers are going to do this makes things much easier. It could be worth investing time in setting this up or training employees in this. 

3. Update Cybersecurity

Delving into crypto adds another layer of know-how when it comes to cybersecurity. Despite cryptocurrencies in general being extremely safe, training employees in phishing schemes or wallet hacks would be beneficial for all.

Benefits of Using Crypto

Whilst there are a few steps that businesses will need to apply before they can fully adopt crypto payrolls into their business plan, the benefits of crypto are too much for some to resist. You are more likely to attract tech-savvy employees to the business if you are operating using crypto, which in the digital world is not a bad thing whatsoever, no matter what industry you are operating within. The practical applications of crypto are also very attractive to many. Limited fees when transacting money mean businesses can avoid international or bank fees. This, coupled with the almost instant transactions, makes things much more streamlined than the ‘pending’ stalemate that often occurs at the end of the month for many businesses. 

To Conclude

In short, the answer is yes. But before you do this, there are a few things that you need to sort out as part of your business plan before you do. Considering legalities in the local area is your first step. Following this, it is worth considering the volatility of these digital assets. Once you have ironed out these pivotal issues, it is about streamlining your use of crypto when paying employees before you can fully realise the reward of these ever-changing but often beneficial digital assets. 

Taking a cautious and well-thought-out approach with any move to crypto would be the best tactic. This will mean you avoid any regulatory pitfalls and don’t endanger anyone involved with the company.