As cryptocurrency becomes more common, employees in the technology and finance sectors explore the idea of receiving wages in digital assets. Although this trend reflects broader innovations in financial technology, it remains a niche practice, and not a general change in payroll systems.
Employers who envisage remuneration based on cryptography must proceed to extreme caution and ensure that neither the employment post nor the level of remuneration can fall under the scope or violate the laws on wages or wages or federal and state states.
These advantages include substantial legal risks, in particular concerning fair labor standards Act and the complex regulatory environment surrounding cryptocurrencies.
Legal advantages and obstacles
A high-level example of an employee opting for cryptocurrency compensation is the star of the NFL, Odell Beckham Jr., who chose to receive his salary of $ 750,000 in Bitcoin in 2021. At the time, it was considered a bold decision, with a lot of wondering if he was financially wise. When Bitcoin’s price fell considerably in 2022, Beckham’s decision seemed risky because Bitcoin fell to a hollow of $ 16,000.
However, in December 2024, Bitcoin had crowded Has $ 100,000 per room, which represents a salary of $ 750,000 from Beckham worth around 1.17 million dollars. This fluctuation illustrates the volatility of cryptocurrencies and the potential financial increase which could be attractive for employees.
A recent study by clarifying the capital find These 30% of employees are open upon receipt of cryptocurrency wages, despite its volatility. The same study, which interviewed 800 employees and 200 business owners, also revealed that 20% of participants expect the cryptocurrency to become a regular part of the pay in the next five years. These statistics highlight the growing acceptance of digital assets.
Despite the growing interest, the vast majority of employees still prefer traditional pay systems. The majority of workers and employers believe that the remuneration of cryptocurrencies is neither practical nor legally advised.
Unlike traditional payroll systems, which guarantee stable and compliant salary payments, cryptography -based remuneration presents significant legal, tax and regulatory risks that employers cannot ignore. Legal and financial obstacles to cryptographic payment remain too important for most companies to adopt on a large scale.
Compliance and tax problems
The most urgent legal concern for employers is compliance with the law on fair labor standards. The FLSA mandates that employees are paid in “species or negotiable instruments payable at peer”, a definition which does not include cryptocurrency because of its volatile nature and its lack of status of tender.
The unpredictability of cryptocurrency – in terms of value and transaction value – could create problems to guarantee that employees are paid at least the minimum wage and authorized at overtime, as required by the FLSA.
Another important consideration for employers is tax compliance. The IRS treats cryptocurrencies as propertyNo money. Employers must retain income and taxes in terms of employment in US dollars, in particular given the fluctuations in cryptography prices. If the employers did not properly appreciate the cryptocurrency at the time of payment, they could face penalties and audits of the IRS.
Beyond tax and salary concerns, employers must be aware of the potential classification of securities. If a cryptocurrency is considered a guarantee by regulators, the payment of employees of these digital assets could violate the laws on securities.
If an employer pays employees in a token or coin that is judged safe, he could face application Actions of the Securities and Exchange Commission so as not to comply with the recording requirements of securities. Consequently, companies must proceed with a reasonable diligence of the cryptocurrency used in the remuneration of employees to ensure that they did not violate the securities laws.
A look in front of you
Given the many legal obstacles and financial risks, employers should not rush to adopt wages based on cryptography. Employers offering digital payments should guarantee compliance with all applicable laws, including salary and time regulations and tax requirements.
Given the complexities involved, such as overtime calculations and benefits of services, careful planning and legal examination are essential to mitigate potential risks.
Employers should also guarantee compliance with wage laws by confirming that crypto payments do not fall below minimum wage laws. In addition, working with tax professionals and the use of payroll services that support cryptocurrency will be crucial to avoid tax report errors.
The remuneration of cryptocurrencies would generally be based on its fair market value when delivered to the employee, not when taxes are paid. Employers can reduce the legal risks associated with cryptographic payroll systems by remaining informed of the latest regulatory changes and seeking professional advice.
Until regulators provide clear advice, companies must proceed with caution. The growing demand for cryptocurrency remuneration reflects broader changes in the workforce and financial systems. However, the legal landscape remains complicated and companies wish to offer cryptographic wages must remain vigilant to avoid potential compliance problems.
By working in close collaboration with legal and tax professionals, employers can position themselves to take advantage of this trend without falling into regulatory traps.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author information
Luis A. Ayala is associated with Wilson Elser and represents companies and individuals established in all aspects of civil disputes.
Write for us: Author guidelines
