Until a few years ago, Bitcoin and other cryptocurrencies were considered the currencies of choice for criminals who exploited the high levels of privacy offered by these systems to make it difficult to trace any transaction, but today they seem to have become an increasingly popular payment and investment method for paying wages as well.
Wages come in Bitcoin
It didn’t take long for businesses to become interested in this new medium by considering using cryptocurrencies to pay their employees’ wages.
Already in 2018, the Japanese company GMO Internet Group allowed 4000 of its employees to receive no more than 100 thousand yen of salary in Bitcoin, corresponding to about € 750.
Even The Cryptonomist frequently pays its employees in cryptocurrencies.
How to pay in Bitcoin
In 2021, there are now many companies working in the field of cryptography and blockchain technology and offering this kind of service.
Platforms, such as Ethlance and Bitwage, are also springing up in the world of freelance work, allowing people to work and get paid using cryptocurrency.
Around the world, regulations are adapting to this technological change and the continued growth in the popularity of digital assets.
There are several solutions for companies that decide to follow in the wake of innovation and offer their employees cryptocurrency payment solutions. Still, we often only talk about partial pays of the salary that is not integral, and the employee requests it.
Pros and cons of salaries in Bitcoin
A salary in Bitcoin is very different from a salary in fiat. Several advantages and disadvantages can be identified about using cryptocurrencies as part of a worker’s salary.
Since the payment via cryptocurrency is not yet widespread in all restaurants, stores, or other kinds of businesses, requesting an entire salary in bitcoin would be challenging to manage, especially in purchases or tax payments, even though the famous Didi Tahiti family has been doing this for years going around the world.
It is less and less difficult to spend your cryptocurrency, for example, thanks to debit cards like Eidoo.
You could immediately convert them into fiat or stablecoin and not be subject to the volatility that Bitcoin has.
Taxes for cryptocurrencies
Another piece is regulation.
You have to remember that each country has its own regulation of the labor market and taxes that apply to income.
In Spain, where cryptocurrency is not legal tender and cannot be recognized as money, the salary paid through the use of this means of payment must follow specific rules:
- It cannot be granted for an amount exceeding 30 percent of the employee’s total salary;
- There must necessarily be a prior agreement between the employer and employee;
- The employee must be registered with Social Security and must pay IRPEF withholding tax, referring to the regulations governing stock options. Therefore, it is considered that the taxable base is the market price when the salary is granted.
Instead, in the UK, from the fiscal point of view, the accounting department of companies that want to adopt this method processes everything in British pounds, then converts the required amount of pounds into BTC to make salary payments.
The tax part depends on the country, and there are not many places where you can get an official salary in BTC, like in New Zealand or El Salvador, where some cryptocurrencies are legal tender.
In Rovereto, we have an original example of a company made in Italy that accepts payments from customers and pays employees with Bitcoin. The bar “Mani al cielo” has been paying some suppliers in bitcoin for about three years and gives employees the possibility to cash a percentage of choice regarding their salary in Bitcoin.
The volatility of crypto
The last and perhaps most important reason for distrust of cryptocurrencies is their volatility.
Employees don’t like to receive as consideration for their work $100 and watch the amount drop to $80 due to a decline in the currency’s value.
Unlike other markets with more predictability, the cryptocurrency market still seems unpredictable, which is why many experts are proposing the use of stablecoins for salary compensation.
Anchored to another financial asset, stablecoins do not suffer the problem of volatility: many workers prefer to receive part of their salary in Tether (USDT) both because they will not see the value decrease and a USDT transaction is faster than an ordinary bank transfer.
This type of salary may be an advantage for those companies that do not have liquidity at a given time, but if it becomes widespread, it could start to develop in countries with a highly volatile local fiat currency or among companies with cross-border salaries that are part of the so-called gig economy.