As the popularity of cryptocurrency grows, more and more businesses are considering whether or not to start paying their employees in crypto. Before making the switch, there are a few things to consider, like the volatility of cryptocurrency and the potential for scams. But there are also some compelling reasons to pay employees in crypto, like the fact that it can be a more efficient way to send money internationally.
Before deciding to pay employees in cryptocurrency, it’s essential to understand how it works and the potential benefits and drawbacks. Keep reading to learn more about paying employees in cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography to secure transactions. It’s decentralized, which means it is not subject to government or financial institution control. The oldest and most well-known cryptocurrency; Bitcoin, was launched in 2009.
Cryptocurrency is often bought and sold on exchanges and can also be used to purchase goods and services. Some businesses even accept cryptocurrency as payment for goods and services.
How Does Cryptocurrency Work?
Cryptocurrency works using a technology called the blockchain. A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing and updating as “completed” blocks are added with a new set of recordings.
Each block contains the previous block’s cryptographic hash, a timestamp, and transaction data. The blockchain is used by Bitcoin nodes to distinguish between genuine Bitcoin transactions and attempts to re-spend coins that have already been spent elsewhere.
The Appeal of Being Paid in Cryptocurrency
There are a few reasons why someone might prefer to be paid in cryptocurrency. Cryptocurrency can be more efficient than traditional payment methods when sending money internationally. Cryptocurrency is also often less expensive to send than conventional methods like a wire transfer.
Another reason people might prefer to be paid in cryptocurrency is that it offers more privacy than other payment methods. When you make a cryptocurrency transaction, your personal information is not shared with the recipient. This can be appealing to people who value their privacy. In November, Mayor Adams said he would receive his first three paychecks in cryptocurrency.
List of The Benefits of Paying Employees in Cryptocurrency
Cryptocurrency is an emerging technology growing in popularity, especially among young people. By offering to pay employees in cryptocurrency, businesses can appeal to job seekers interested in working with cutting-edge technologies.
- It is a more efficient way to send money internationally.
- It is often less expensive to send than traditional methods like wire transfers.
- It is a great way to attract and retain talent.
- It can also help protect their privacy.
Wage Regulations at the State and Local Level
The U.S. Department of Labor’s Wage and Hour Division (WHD) is responsible for enforcing the federal Fair Labor Standards Act (FLSA), which sets standards for minimum wage and overtime pay. The FLSA does not explicitly address the payment of wages in cryptocurrency, but the WHD has said that wages in cryptocurrency are subject to the same rules as wages paid in other forms.
This means that employers must ensure that employees paid in cryptocurrency are still receiving at least the federal minimum wage of $7.25 per hour for all hours worked and any overtime pay that may be due.
Employers should also be aware of state and local wage laws, as they may set a higher minimum wage than the federal rate. Additionally, wage payment laws in some states are more prescriptive. For instance, in New York, Maryland, Pennsylvania, and Colorado, wages must be paid “in lawful money of the United States.”
How to Start Paying Employees in Cryptocurrency
If you’re interested in paying your employees in cryptocurrency, there are a few things you need to do to get started.
First, you’ll need to find a cryptocurrency exchange where you can buy the cryptocurrency you want to use to pay your employees. After choosing and purchasing the currency from among the various options, you’ll need to create a digital wallet for each of your employees.
A crypto wallet is a digital account that holds the employee’s cryptocurrency. Think of it as a bank account for cryptocurrency. You can then transfer the cryptocurrency to your employees’ wallets from your exchange account.
Potential Drawbacks of Paying Employees in Cryptocurrency
There are a few potential drawbacks to paying employees in cryptocurrency. For one, cryptocurrency is a volatile market, which means the currency’s value can fluctuate significantly. This can be a risk for businesses because it’s difficult to predict how much a currency will be worth in the future.
Another potential drawback of paying employees in cryptocurrency is that it’s still a relatively new technology. This means there are still some kinks that need to be ironed out. For example, there’s currently no standard way to report cryptocurrency income on tax returns. This could change in the future, but for now, it’s something to keep in mind if you’re thinking about paying your employees in cryptocurrency.
The Future of Cryptocurrency
Cryptocurrency is a new technology that is gaining prominence. While there are a few potential drawbacks to paying employees in cryptocurrency, it’s still an option that businesses should consider if they’re looking for a more efficient and affordable way to send money internationally. Only time will tell how cryptocurrency will develop, but it’s an exciting technology to watch. Employers should stay up-to-date on the latest developments to comply with applicable laws.
Seek Professional Aid
While cryptocurrency is still in its early stages of development, it’s not too early for companies to start thinking about how they might begin paying employees in this new form of currency. ASAP Payroll is here to help you make the switch and offer our years of expertise in payroll management. Contact us today to learn more about how we can help you switch to cryptocurrency payments and take your business into the future!