Last Updated: April 20, 2021
The demand for wages paid in cryptocurrency is soaring.
Crypto-forward businesses are rising to the occasion. Even companies outside of the blockchain space like Twitter are considering paying their employees in crypto.
A crypto-powered payroll benefits both employee and employer: more freedom over your funds, fast global payments, and no banks intermediating and delaying payment. Companies can even pay partial salaries in cryptocurrency — an attractive perk for an increasingly tech savvy workforce.
Today's crypto ecosystem is maturing. With national currency-pegged stablecoins, safer payment rails, and secure wallets, it's never been easier to start paying your people in cryptocurrency.
Of course, as with any major business decision, there are risks that you need to assess and plan for accordingly. Here’s a critical look at both the benefits and necessary considerations to make when paying employees in crypto.
Considering a crypto payroll solution for your company? We're here for you with our Mass Pay solution that allows you to pay up to 500 employees in cryptocurrency.
Benefits of Paying Employees in Cryptocurrency
1. Simplified cross-border payments for a global workforce
Companies without borders need payments without borders. Today, it’s not uncommon for teams to collaborate remotely from various continents. But the legacy payment infrastructure can’t keep up.
When it comes to global payments, blockchain reigns supreme. Compared to wire transfer, digital currency payments are up to 96% faster. Unlike wire transfers, digital currency transactions are also 100% transparent and verifiable on the blockchain. Blockchain payment rails eliminate the uncertainty between sending payment and the time it takes to clear with your bank and the recipient's bank.
Payment Methods Compared
2. Empowering your domestic workforce
Even if your employees are all based in the same country, there are still advantages to paying them in crypto. Getting paid in crypto is the easiest way for individuals to invest in other crypto assets. By 2030, digital currency is slated to displace 25% of national currency. Providing a simple avenue for your employees to access this revolutionary financial technology is a forward-thinking move.
3. High security on-chain
Since every transaction is recorded on a public ledger, your payments to employees are immutable and safe on the blockchain. There’s no need to worry about whether your payment was received. With pragmatic security precautions, web3 wallets (desktop, mobile, and hardware) are almost impossible to hack, giving you the peace of mind knowing your crypto is secure. When you’re considering the best methods to pay employees in crypto, make sure to choose a safe wallet to store your funds.
Read more: The Best and Safest Crypto Wallets for Businesses
4. No volatility with stablecoins
With stablecoin payments, you don't have to worry about capital gains taxes. You also won’t have to retrace your steps to see what the spot price was at the exact time you made your payment. Since stablecoins are pegged 1:1 to national currencies, you and your employee won’t have to pay capital gains tax (more on tax implications below).
Read more: USDC vs. USDT: Which Stablecoin Should You Use?
What Else to Consider When Paying Employees in Crypto
1. Legal compliance
Wherever you're located, it’s important to make sure that you and your business are meeting the legal requirements in your locality — whether that’s a specific state in the US or in another country. Do your due diligence and consult with a lawyer before paying employees or contractors in cryptocurrency.
To learn more on legal compliance, check out this short article from The National Law Review.
2. Tax considerations
Since cryptocurrency is treated as property by the IRS, anyone based in the US will incur capital gains taxes when cashing out crypto for profit. But paying wages in stablecoins creates no additional tax burden, since there are no major gains or losses in price. Crypto isn't a vehicle to avoid taxes altogether: employees will still need to pay their typical income or state taxes depending on where they reside. Tax law is not universal, so make sure you research what laws apply in your specific country or locality.
Read more: Simplifying Crypto Taxes with Stablecoins
3. Finding the right solution
When it comes to crypto payroll services, there are only a few options on the market today. The biggest problem for blockchain companies? Until now, there hasn't been a non-custodial, comprehensive solution with built-in accounting.
Crypto payroll solutions like BitPay or BitWage do exist and many companies are happy with their services. However, both of these options are custodial — meaning they take custody of your funds and function similar to a traditional payroll. This eliminates many of the benefits of using blockchain technology for payments. For crypto-forward companies and decentralized entities, that might not be the most appealing option.
Introducing Gilded's Mass Pay Solution
In April 2021, we officially launched our Mass Pay solution. With Mass Pay, businesses are able to pay up to 500 employees at once in ETH and stablecoins* in one streamlined transaction, saving time and gas fees.
Gilded is now the ONLY solution on the market today that makes it possible for a business to:
- Accept payment in crypto
- Pay employees and contractors in crypto
- Account for crypto payments with zero headaches
- Support a wide range of custodial and non-custodial wallet choices
Gilded is a full service option for your entire back office workflow, from payments to accounting. And we never touch your funds. For companies that are paying employees or freelancers in crypto (or would like to start), we're perfectly positioned to make that as easy as possible.
*Mass Pay can support any ERC-20 token.
Note: This article is for informational purposes only and does not constitute legal or investment advice.
Gilded empowers businesses to transact globally, using blockchain to unlock more efficient business operations. Our seamless invoicing, payment and accounting software helps businesses get paid faster and more transparently, with dramatically lower fees.
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