Between hitting an all-time high trading price over $63,000, landing on the balance sheets of major companies, and being recognized as inevitable by financial institutions that once tried to avoid it, the rise of Bitcoin – and the broader adoption of cryptocurrency – is one of the bigger stories of 2021.
Innovative employers are responding by putting Bitcoin compensation on the table as a benefit to attract top talent — and it it’s not just tech companies.
Under the Fair Labor Standards Act, wages must be paid “in cash or negotiable instrument payable at par.” Cryptocurrency is, of course, neither.
In Georgia, for example, the statute does not apply to salaried company officials, superintendents, or certain department heads, or to employers in the farming, sawmill, and turpentine industries.
currency in amounts that meet the federal, state, and local requirements for minimum wage, overtime, or salary-based exemptions.
By offering to pay employees in cryptocurrencies, companies may attract workers looking for a forward-thinking employer by distinguishing themselves as early tech adopters that offer compelling benefits and compensation.
In the conversion option, the employee may bear some risk that the exchange rate available to the employer is not as favorable as what the employee could get buying the cryptocurrency themselves.
And you might not want to simply assume that anyone signing up to receive compensation via cryptocurrency understands these swings, making sure to provide sufficient notification about the realities to those considering the option.
Despite IRS guidance published on the topic in 2014, and clarified in great detail in late 2019 , many cryptocurrency holders seem to be unaware that they are walking into an interesting lesson in capital gains taxes when they buy, sell, exchange, and are paid in cryptocurrency.
WeWork announced that it will start accepting payment in Bitcoin, Ether, and several other cryptocurrencies as payment, including for its memberships, and intends to hold the assets on its balance sheet.
Mastercard’s Executive Vice President for Blockchain and Digital Asset Products, Raj Dhamordharan, commented, “Our philosophy on cryptocurrencies is straightforward: It’s about choice.
Venmo, a large peer-to-peer payment app, announced that it would support cryptocurrency payments between users.
However, Secretary Yellen has also warned that Bitcoin is “extremely inefficient,” and the Biden administration is reportedly developing a crypto regulatory framework.
Other states, such as Georgia and Illinois, have considered legislation to allow cryptocurrency tax payments – but to date, that legislation has failed.
The government taking note of the benefits of cryptocurrencies is a large step toward legitimacy and mass adoption.
As we have discussed, there are many potential traps when paying employees with Bitcoin and the decision to offer payment in Bitcoin should not be taken lightly.
While there are many potential legal issues that may arise, employers who want to pay employees with cryptocurrency can likely find solutions with the help of legal counsel.
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