The Future of Work: Could Crypto Change the Way We Get Paid?
Tech-savvy businesses are continuously finding new ways to bring their workforce into the digital age. From hiring remote employees to conducting meetings in augmented reality, the workplace is changing faster than ever.
One of the latest trends? Paying your employees in cryptocurrency.
But should business owners start shelling out crypto instead of cold, hard cash? Let’s explore the benefits and challenges of paying your employees in cryptocurrency.
The Rise of Cryptocurrency
Cryptocurrency has been on the rise in recent years, partly due to its increased mainstream adoption. While Bitcoin is the most well-known cryptocurrency, there are now over 12,000 different types in circulation.
And it’s not just individuals who are investing in crypto. Businesses are getting involved too. In 2019, Microsoft began allowing customers to use Bitcoin to buy content in its Windows and Xbox stores. And in 2021, Tesla made headlines when it announced that it had invested $1.5 billion in Bitcoin and would accept the cryptocurrency as payment.
The appeal of cryptocurrency is clear. It’s borderless, decentralised, and secure. For businesses, that means lower transaction fees and reduced fraudulent activity. For individuals, it offers an alternative to traditional banking systems.
Could Crypto Change the Way We Get Paid?
With its growing popularity, it’s not surprising that people are now interested in using cryptocurrency to receive their salary. After all, what’s not to like about being paid in something that could increase in value?
Over the past few years, several high-profile individuals have received part of their salary in Bitcoin. From famous sports stars like former Seattle Seahawk Russell Okung, musicians Mel B and 50 Cent and even politicians like Miami Mayor Francis Suarez.
And it’s not just celebrities and politicians interested in being paid in crypto. According to research conducted by SoFi, over a third (36%) of workers want the ability to receive part or all of their paycheck in cryptocurrency.
Paying Employees in Cryptocurrency: The Perks
So, what are the benefits of paying your employees in cryptocurrency?
First, it could help you attract and retain top talent, particularly tech-savvy employees interested in working for forward-thinking businesses and Gen Z and millennial employees who are more comfortable with digital currencies.
Second, the rise of global mobility means more employees are working remotely than ever before. According to the World Population Review, over 8 million US expatriates are working and living abroad. The think tank Institute for Public Policy Research (IPPR) estimates that around 5.5 million Brits are living abroad – that’s almost 1 in 10 of the UK population! With more employees working internationally, business owners have to pay salaries in multiple currencies which often comes with high transaction fees and foreign exchange costs. However, cryptocurrency can be used to pay employees no matter where they are in the world without these additional costs.
Finally, with the rise of stablecoins like USDT, the volatility risk is significantly reduced. Stablecoins have been trialled and tested by major companies like IBM, Facebook, and JPMorgan Chase.
Essentially, these digital currencies are pegged to a real-world asset like the US dollar, which means they avoid the huge fluctuations in value often seen with other types of cryptocurrency. This means that businesses can be more confident about using them to pay their employees without worrying about the currency’s value fluctuating.
Risks of Paying Employees in Cryptocurrency
Of course, there are some challenges associated with paying your employees in cryptocurrency.
First, it’s important to remember that the value of cryptocurrency is incredibly volatile. This week the news hit that the popular crypto exchange FTX filed for bankruptcy. This sent shockwaves through the financial industry as the company could owe over 1 million creditors. While this is an extreme example, it does serve to highlight the risks associated with cryptocurrency. For example, if you paid your employees in Bitcoin and the value of Bitcoin suddenly crashed, your employees would be left out of pocket.
Compliance is another big issue. Cryptocurrency is still a relatively new phenomenon, and the regulatory landscape is constantly changing. That means that there’s a real risk that businesses could inadvertently run afoul of the law by paying their employees in crypto. For example, countries like Egypt and Qatar have banned cryptocurrency, so if you have employees in those countries, you would need to be very careful about how you pay them.
Finally, it’s worth noting that crypto isn’t regulated when it comes to social securities like pensions and healthcare. Also, if an employee wanted to take out a mortgage, they would be unable to use their crypto earnings as collateral. So, while there are some definite benefits to paying your employees in cryptocurrency, it’s important to weigh up the risks before making the decision.
A Hybrid Model Could be the Answer
So, what’s the solution? While some definite risks are associated with paying your employees entirely in cryptocurrency, that doesn’t mean that the idea is a non-starter.
One way to mitigate some risks would be to adopt a hybrid model, where employees are paid part of their salary in crypto and part in fiat currency. For example, suppose you pay your employee £5,000 a month. They could opt-in to receive 10% of that, or £500, in crypto. This would give them the opportunity to participate in the upside of cryptocurrency without being completely exposed to the downside.
For this model to be successful, the option to be paid in crypto would need to be voluntary. Employees would also need to be allowed to convert their crypto earnings into fiat currency on a regular basis.
Paying employees in cryptocurrency is a great way to attract and retain top talent, but it’s important to remember that there are some risks associated with this approach.
A hybrid model, where employees are paid part of their salary in crypto and part in fiat currency, could be a good way to mitigate some risks while reaping the benefits.
Working with a reputable payroll provider with experience in paying employees in cryptocurrency is essential to ensure that your business stays compliant. They’ll be able to:
● Help you choose the right cryptocurrency for your needs.
● Convert fiat currency into crypto.
● Pay your employees in crypto.
● Monitor compliance regulations and ensure that you’re always up to date.
About the Author:
As Co-founder and Managing Director at Agile HRO, Jamie Haerewa helps businesses expand their remote workforces by merging cutting-edge technology with industry experts. With 12+ years of experience in the global PEO, global mobility, and workforce solutions, she is a recognised thought leader with her valuable insights featured in popular publications like Business Leader, Grit Daily News and HackerNoon.
Her hard work and determination have resulted in her company being awarded the #1 payroll provider in Singapore in 2020 and SME100’s fastest-moving company in 2022. She is also committed to giving back to the community and is a proud sponsor of education for the next generation of Cambodia through the not-for-profit organisation Caring for Cambodia.