What is

Crypto Payroll


Using cryptocurrency as a way to pay employees their salaries.

Crypto payroll is when employees receive wages or salaries from cryptocurrencies ( Bitcoin and Ethereum are the most popular types) rather than traditional currencies like USD, CAD or Euros. It involves using blockchain technology and cryptocurrencies to compensate employees for their work.

How Does Crypto Payroll Work? 

The process of crypto payroll has a few steps you should get to know: 

  • Agreement and Setup: The employer and the employee agree to use cryptocurrency inthe payroll system. They establish the terms and conditions, including the frequency of payments, the amount to be paid in cryptocurrencies, and any potential tax implications.
  • Wallet Creation: The employee sets up a cryptocurrency wallet, which is a digital tool used to store, send, and receive cryptocurrencies securely. Different cryptocurrencies may require specific wallets.
  • Conversion or Direct Payments: Depending on the arrangement, the employer may convert a portion of the employee's salary into cryptocurrencies before sending it to the employee's crypto wallet. Alternatively, the employer may send the agreed-upon cryptocurrency amount to the employee's wallet.
  • Record Keeping: The employer must maintain accurate records of the cryptocurrency payments made to employees for accounting and taxation purposes.
  • Tax Compliance: Crypto payroll introduces unique tax considerations due to the volatile nature of cryptocurrency values and varying regulations across different jurisdictions. The employer and the employee must adhere to tax laws and report crypto income appropriately.

It's essential to note that implementing a crypto payroll system can be more complex than traditional payroll due to regulatory and security considerations. Employers and employees must be aware of the potential risks and benefits of cryptocurrencies, such as price volatility and security issues.

Additionally, it's essential to consider cryptocurrencies' legal and regulatory landscape in the relevant jurisdiction, as regulations around crypto payments can vary significantly from country to country.

How Can Employers Leverage Crypto Payroll? 

Okay, this sounds great, but what’s in it for me and my company? 

You may be asking yourself this, but crypto payroll can benefit you as an employer. Employers can use crypto payroll to their advantage in several ways, but it's crucial to approach this payment method carefully and understand the associated risks and benefits. Potential advantages for employers can look like this:

  • Attracting Tech-Savvy Talent: Offering crypto payroll can be attractive to tech-savvy and forward-thinking employees, especially in blockchain technology and cryptocurrencies industries. It can help employers stand out in the job market and attract top talent.
  • Lower Transaction Fees: Traditional payroll systems often involve intermediary banks and financial institutions, which can lead to transaction fees. With cryptocurrencies, especially those with low transaction fees, employers may reduce the cost of processing payroll.
  • Faster International Payments: Cryptocurrencies can facilitate faster and more cost-effective cross-border payments than traditional international wire transfers. This can be beneficial for companies with employees working in different countries.
  • Financial Inclusion: Crypto payroll can be particularly advantageous for employees in regions with limited access to traditional banking services. Cryptocurrencies can provide financial inclusion and enable employees to participate in the global economy.
  • Employee Morale and Engagement: Offering innovative payment options like crypto payroll can boost employee morale and engagement. It demonstrates that the employer is open to embracing new technologies and exploring modern payment methods that align with the interests of the workforce.
  • Tax Benefits: Depending on the jurisdiction and specific regulations, tax advantages may be associated with using cryptocurrencies for payroll. For instance, some regions might have lower tax rates for crypto transactions.
  • Portfolio Diversification for the Employer: Employers who opt to hold a portion of their reserves in cryptocurrencies might see potential benefits from diversifying their investment portfolio, especially if the value of those cryptocurrencies appreciates over time.

However, it's crucial to recognize that implementing crypto payroll comes with potential challenges and risks. Some of these include:

  • Regulatory Compliance: Employers must navigate complex and evolving cryptocurrency regulations and ensure compliance with tax laws and financial reporting requirements.
  • Volatility: The value of cryptocurrencies can be highly volatile, which means that the value of the payroll may fluctuate significantly over short periods. This volatility can impact employees and may require careful planning and risk management.
  • Security Concerns: Cryptocurrencies require secure storage and handling to protect against theft or hacking. Employers must invest in robust security measures to safeguard their employees' crypto holdings.
  • Employee Preferences: While some employees may welcome receiving their pay in cryptocurrencies, others may prefer traditional fiat currency due to stability concerns or lack of familiarity with cryptocurrencies.

In conclusion, employers can leverage crypto payroll to attract talent, lower transaction costs, and offer innovative payment solutions. However, it's essential to carefully assess the potential advantages and disadvantages and consult with financial and legal experts to ensure a smooth and compliant implementation of crypto payroll.

Manage Your Global, Distributed Team with Borderless 

Managing a remote team can be challenging if you use traditional currencies or crypto for payroll. At Borderless, we are experts in international employment. If you’re looking at trying out a coworking structure to include remote, distributed workers, getting an outside assessment of how it will impact your team can be beneficial.

We can help you understand the different work cultures around the world and be your safety net through your employees’ lifecycles, from the planning stage of onboarding, right through to retirement in 150+ countries. 

Book a demo today to find out how we can help.