Crypto has undoubtedly emerged as a dominating and highly versatile form of currency in today’s market scene. One of the most impressive breakthroughs offered by digital currency is the use of crypto payroll to compensate employees.

The rise of companies using and accepting payments in cryptocurrency is expected to integrate into more business models in the years to come.

If you haven’t explored what crypto payroll is all about, then give this article a read to expand your crypto knowledge!

What is Cryptocurrency Payroll?

Cryptocurrency payroll, or crypto payroll, involves compensating employee wages in the form of digital currency such as Enterprise Blockchain.  Compared to disbursing employee salaries through bank transfer, cryptocurrencies offer notably faster and more economical transaction fees.

A report published by Deel in 2021 cited that there has been a steady 10% monthly increase in the number of employees who prefer receiving payments in cryptocurrency since November 2020.

Crypto payroll supports several types of cryptocurrencies, but the most trusted and widely used ones are Bitcoin, Ethereum, Cardano, and Solana. In some companies, employees also accept NFTs (Non-Fungible Tokens) and other forms of digital assets as payment.

The following are among the companies that have trail-blazed the use of crypto to pay their employees:

  • GMO Group
  • SC5
  • BitShares
  • Fairlay
  • Blockchain.info
  • Bitwage
  • OpenWeb
  • Purse.io
  • Exodus Wallet
  • TrustSwap

From a global perspective, Japan has been a known leader in delving deep into blockchain technology. Germany has a solidly established legal structure for crypto regulations, and Switzerland imposes zero income or wealth tax on cryptocurrency. Individual crypto investors are also not required to pay capital gains tax.

How Is Cryptocurrency Regulated?

There is no universal law or regulation that governs the crypto industry across all countries, but each country has its own set of constitutional frameworks governing the use and trade of crypto.

In the US, Biden’s administration announced a new and extended regulation that bestows more authority on the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in monitoring crypto regulations. The new regulations will focus on regulating crypto exchanges, monitoring any illegal crypto practices, and exploring the potential benefits of establishing a central bank digital currency (CBDC).

Japan’s Payment Services Act (PSA) acknowledges cryptocurrency as legal property. Crypto investors are taxed, with crypto classified as miscellaneous income. Compliance with AML/CFT obligations and registration with the Financial Services Agency is mandatory.

South Korea is focused on creating the Digital Basic Asset Act. At the same time, a 20% tax on digital assets has already been approved by the South Korean parliament, although it is said to take effect by the year 2025 or 2026.

Australia imposes capital gains tax on cryptocurrencies and bans offering privacy coins. Registration with the Australian Transaction Reports and Analysis Centre (AUSTRAC) plus compliance with AML/CFT obligations grant the freedom of operation for crypto exchanges.

Brazil has passed a law that legally permits the use of cryptocurrency as a payment method across the country. Portugal imposes a 0% tax on crypto, making it a haven for crypto investors and exchanges.

Meanwhile, cryptocurrency is legal in all European Union countries, but regulations and taxations vary per country.

Pros and Cons of Cryptocurrency Payroll

Cryptocurrency payroll comes with some pros and cons. Let’s see which ones:

Pros

Customizable. Aside from Bitcoin, employers can also pay their employees using their preferred digital currency. It is more convenient compared to disbursing employee pay stubs and salaries in a single type of currency.

Possible tax rebates. Some countries impose significantly lower tax rates on crypto payments. That means employers potentially cut costs on taxes when using cryptocurrency to pay employees internationally.

Millennial- and Gen Z-approved. Today’s workforce is gradually comprised of more millennials and Gen Z people. Adopting the use of crypto payroll will surely appeal to them and entice higher retention for younger employees.

Cons

Inconsistent integration. The economic framework that governs all things crypto is still in the midst of trials and errors. Also, not all businesses and countries have fully opened their doors to the integration of cryptocurrency in mainstream payments and financial structures.

Different crypto regulations and tax laws. The differences in regulations could prove beneficial or disadvantageous for a business depending on the country where the crypto payments are sent.

Key Takeaways

Crypto payroll is worth giving a try now that the world is gradually recognizing cryptocurrency as a legitimate and modern unit of payment. It offers flexibility, enables fast transactions, and highlights employee convenience.

It is best to study the crypto regulations in your country as well as the laws on cryptocurrency payments in other locations to ensure 100% compliance when disbursing employee salaries through any form of digital currency.

 

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