Legal and Practical Guide to Paying Employees in Cryptocurrency
The article by Zornitsa Vuteva examines the growing trend of paying employees in cryptocurrency. It explores the legal aspects, benefits, and challenges of this practice, particularly in the U.S. where state and federal laws vary. Some states like Illinois and New York mandate wages be paid in U.S. dollars while other states allow cryptocurrency for bonuses. The IRS treats cryptocurrency as property, subject to federal employment taxes. Pros include faster transactions, lower fees, and potential tax efficiency, while cons involve compliance issues, volatility, and inconsistent global integration. Companies like GMO Group, BitShares, SC5, Fairlay, and Bitwage already compensate employees in crypto. Employees are responsible for income and capital gains taxes. Employers should draft authorization forms and comply with labor laws for minimum wage and overtime when paying in crypto.
Neutral
Paying employees in cryptocurrency is a growing trend with potential benefits like faster transactions and lower fees, but it also presents challenges such as legal compliance and volatility. Due to the mixed nature of its impacts, the overall market effect is neutral. It is neither exclusively positive nor negative but requires careful handling to benefit from its advantages and mitigate its risks.