Paying Employees with Cryptocurrency: The Pros and Cons

July 13, 2022
Paying Employees with Cryptocurrency: The Pros and Cons

Bitcoin, Litecoin, and Ethereum, oh my! Maybe you remember hearing a couple years back that the rapper 50 Cent “forgot” that he accepted Bitcoin for his 2014 album. When he realized it in 2018, the roughly 700 Bitcoins he got were worth millions. Perhaps you saw a 2021 tweet from Miami’s Mayor Francis Suarez saying that he’d receive his first paycheck in Bitcoin. For many employers, paying employees with cryptocurrency is probably something you’ve never considered before. But these days, cryptocurrency is inching closer and closer to the mainstream. Plus, younger generations — you know, the youthful talent that everyone is competing for — might very well be into the idea. According to Investopedia, 60% of Millennials already have digital currencies like Bitcoin. There’s a lot to think about when considering cryptocurrency. Here’s a crash course in what cryptocurrency is and the pros and cons of paying employees with cryptocurrency. Oh, we'll let you know about some laws and regulations to consider, too.

What are cryptocurrencies and do their values fluctuate?

Cryptocurrencies are digital currencies that are virtually secured in a decentralized way. This means that it’s nearly impossible to counterfeit cryptocurrencies and that they’re not issued by 1 central authority. Instead, the currencies like Bitcoin (Bitcoin is just one type of cryptocurrency, or “coin”) are enforced by a shared ledger that’s dispersed across a network of computers. One of the most important things to understand about cryptocurrencies is that their values in U.S. dollars fluctuate over time. For example, in 2010, one Bitcoin cost about 9 cents. At one point in 2021, one Bitcoin was worth over $68,000. Today, 1 Bitcoin is worth roughly $20,000.

Why would someone want to be paid in cryptocurrency?

Some people have predicted that the price of cryptocurrencies like Bitcoin (perhaps the most notable cryptocurrency of them all) will continue to increase over time. If this holds true, getting paid in cryptocurrency today could mean a major return on investment in the future. Generally, younger generations are the ones who are into the idea of getting paid in cryptocurrency. A Nasdaq blog post mentioned a global poll that found that over 1/3 of Millennials and half of Gen Z would “be happy” to receive half of their salary in Bitcoin or another cryptocurrency.

Can employers pay their employees with cryptocurrency?

There are companies out there that allow their employees to allocate a portion of their paychecks into cryptocurrencies. For example, a San Francisco-based startup called ForUsAll Inc. plans to launch an alternative 401(k) product later this year that lets employees put up to 5% of their investments in cryptocurrency. However, there’s a big difference between letting employees convert their checks into cryptocurrencies and flat out paying them in cryptocurrency. In April, a representative for the U.S. Department of Labor explained that regulations under the Fair Labor Standards Act (FLSA) require that payment is made by cash or check and that they have to be paid unconditionally.

For employers interested in paying their employees in cryptocurrency, the safest bet is likely to pay them in U.S. dollars but create the option to let them convert some or all of their paycheck to cryptocurrency.

When pressed to give a yes or no answer about whether or not employees can be paid in cryptocurrency, the representative offered no further comment. For now, guidance from the DOL is hazy at best.

What does the IRS say about wages in cryptocurrency?

Guidance from the IRS, on the other hand, is much clearer. The IRS has stated in the FAQ section of its virtual currency transactions page that virtual currency constituted wages for federal tax purposes. This means that the IRS sees no issue with an employee receiving payment in cryptocurrency. For employers interested in paying their employees in cryptocurrency, the safest bet is likely to pay them in U.S. dollars but create the option to let them convert some or all of their paycheck to cryptocurrency. This avoids potential wage issues that can arise out of the fluctuating value of cryptocurrencies. Because their values fluctuate so much, employers who directly pay in cryptocurrency could inadvertently underpay their employees. This could lead to legal violations for minimum wage and overtime requirements on federal, state, and local levels.

Paying employees with cryptocurrency: The pros and cons

Whether you want to take the bold step of directly paying employees with cryptocurrency or you’re interested in setting up an option for employees to convert their paychecks into cryptocurrency, there’s still a lot to consider. Every business is unique. But, in general, here are some pros and cons to consider:

What are the benefits of paying employees with cryptocurrency?

The pros of paying employees with cryptocurrency include:

Can be faster than checks or ACH deposits

Cryptocurrency transactions take place digitally within minutes. Paying employees with cryptocurrency can be a much faster option than cutting physical checks or even going through the traditional ACH deposit process. Plus, because cryptocurrency transactions don’t have to go through a formal financial institution, you can avoid wire and international transfer fees that come with paying a global workforce by opting for cryptocurrency.


Bitcoin is just one type of cryptocurrency. According to CNBC, there are over 19,000 cryptocurrencies available. This means that your employees have a lot of choice about how exactly they want to receive their payments.

Desirability among younger employees

Younger generations are investing in cryptocurrency. Especially as you compete for talent, offering payment in cryptocurrency could help woo younger applicants. But it's not only younger generations who are interested in it. Investors of all ages dabble in cryptocurrency. You might be surprised by who among your employees is interested in it!

What are the drawbacks of paying employees with cryptocurrency?

As with most things, there are upsides but also downsides to paying employees in cryptocurrency. Some of the cons of this approach include:

High volatility

While cryptocurrencies can absolutely skyrocket in value seemingly overnight, they have the same potential to drop just as quickly. The more money someone has in cryptocurrency, the more effort is required to manage it and any cash flow that stems from it. If employees are getting paid in cryptocurrencies, a sudden decline could leave them in a cash-strapped situation.

Compliance risk

While the law isn’t exactly clear yet, if you start directly paying your employees in cryptocurrency, the law could change to outlaw the practice. If that happens, you could end up scrambling for compliance at the last minute. As mentioned above, there are also wage compliance issues to consider as well, which could leave your business vulnerable to lawsuits.

Inconsistent mainstream integration

While cryptocurrency is accepted as payment by some businesses, it isn’t by many. In some countries, cryptocurrency is not in adherence with the law. This means that there are simply some places where you can’t pay your employees in cryptocurrency even if you (and they!) want payment to be in cryptocurrency form.

The takeaway: Should you pay workers with cryptocurrency?

What a time to be alive, right? Who would have imagined paying their employees in a decentralized digital currency 10 years ago? Paying employees with cryptocurrency opens up a ton of new opportunities, but also a fresh set of concerns. Overall, it’s an individual decision for each unique employer and employee to make. There’s no truly right or wrong answer. The key is to think the decision through thoroughly. If you do go the cryptocurrency payment route, consider offering training to your employees who have an interest in it. This way you can help them handle their investment responsibly. Who knows, cryptocurrency training might be the office perk of the future! If you’re not ready to make the leap to offering payment in cryptocurrency yet, keep an eye on it for the future. If it continues to become more and more mainstream, chances are it will get easier to make the switch in the future.

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