With the help from recent news headlines chronicling the substantial increase of some cryptocurrencies, more members of the public are discovering what people who’ve dealt with digital currencies like Bitcoin already knew. Although volatility is constant, it is possible to become wealthy with Bitcoin and similar non-physical forms of money.
So you might be wondering, why isn’t it possible for your workplace to pay your wages in cryptocurrency? Some employers actually do - we’ll cover those later. But first, let’s discuss four barriers that make widespread adoption of that payment method difficult.
1. Some laws specify cash or check payments only
One of the main federal regulations that cover employee wages in the US is the Fair Labor Standards Act (FLSA). It stipulates that employers must meet at least some of their minimum-wage requirements by paying workers with cash or checks - as of now, Bitcoin payments don’t apply and the same is true for overtime compensation.
However, outside those federal requirements for minimum wage and overtime, employers and workers can agree on other forms of payment if desired. Employers could theoretically pay employees partially with cash or checks, then give them supplementary amounts made up of cryptocurrencies.
The system isn’t so straightforward in certain states, though. For example, Delaware and Texas are two of several states where wages can only be comprised of US currency.
2. Cryptocurrencies may be deemed securities
The Securities and Exchange Commission (SEC) issued a statement about cryptocurrencies to remind people that investments associated with them can quickly cross into other geographical boundaries without owners’ knowledge, which increases the possible risk.
Also, the SEC may ultimately decide some cryptocurrencies are designated as securities. In that case, employers would have to comply with additional laws for securities in addition to the wage-related rules mentioned above.
3. Employers could feel wary
The rapid fluctuations in value associated with Bitcoins and other cryptocurrencies may make employers balk at the idea of paying their workers through these non-traditional means. Similarly, they might feel that not enough merchants accept cryptocurrencies as payment yet, even as the number grows.
However, a BitPay debit card allows people to convert amounts from their cryptocurrency wallets into dollars in minutes. People can then use the more widely accepted currency anywhere that accepts Visa. This capability takes care of the potential issue of someone having cryptocurrency but not being able to spend it.
The card also offers a safeguard if cryptocurrency holders learn about market conditions that signal a likely, sudden drop in value. In such a scenario, people could quickly make conversions using the card to avoid holding onto large amounts of cryptocurrency that could lose substantial worth in a few days or less.
4. The tax implications vary by country
If an employer regularly hires remote workers who are legal residents in one country and pay taxes in other, the different ways countries view cryptocurrencies for tax purposes could also be a barrier to adoption.
In Canada, for instance, the country views cryptocurrency earnings as barter transactions. Companies based in the US have to convert cryptocurrency values to dollar amounts for the IRS on the dates payments occur. Similarly, employees must report all earnings in dollars, even when earned as Bitcoins or another currency.
Depending on the respective countries, reporting cryptocurrency earnings for tax purposes could be a straightforward process. However, companies with large percentages of international workers may decide that figuring out the logistics requires too much time-consuming research. If that happens, workers who strongly desire cryptocurrency payments could offer to find out the details and report back to their employers.
Some companies do pay employees with cryptocurrency
Despite the challenges we’ve presented, pioneer companies do exist that pay their employees in cryptocurrencies. Notably, none of the businesses are within the US, so some of the issues you learned about above may not apply to them. Geographical differences aside, if a growing number of companies around the world conclude that cryptocurrency payments for employees make sense, it could encourage other entities to follow suit.
Starting in February, GMO Internet, a Japanese company, will give portions of employee salaries in Bitcoin. Employees will be able to receive the equivalent of $890 per month in Bitcoins. A representative of the company said the move to offer Bitcoins as salary was intended to make the company at large more literate about how cryptocurrencies work.
Another business to consider is Buffer, a company associated with social-media tools that save time and grow traffic. It pays one of its developers, who reside in South Africa, a portion of his salary in Bitcoins. In this case, the employee is a big believer in the potential of Bitcoins. As such, he wanted to receive five percent of his wages in the currency.
The man approached a payment associate that works with Buffer and began a dialogue, later completing research to find a company that specializes in payroll services related to cryptocurrencies. He’s a good example of an employee who was proactive and got positive results even though the company was not offering widespread cryptocurrency payments.
If a business is already in the cryptocurrency market, they might even ask employees during the hiring process whether they’ll accept non-physical payments. That situation happened at Bitedge, a sports betting establishment based in Australia. The company’s web developers receive 100 percent of their income in Bitcoins.
The future is bright
If you’re eager to explore the possibility of getting paid in cryptocurrency, it’s crucial to be aware of the volatility associated with cryptocurrency values, as well as the possibility that employers may not be up to speed about digital forms of payment. They might require you to research the specifics and provide guidance.
As cryptocurrencies become more prominent, finding ways to overcome these and other challenges get easier. You can strengthen your stance as an early, in-the-know adopter and get involved in what could eventually revolutionize the way employers give compensation.