By 2021, the popularity of Bitcoin and other cryptocurrencies has gone beyond the crypto space. Many companies and individuals are recognizing the benefits of this technology in a variety of areas, especially in everyday payments. And that includes crypto payroll: paying your employees and/or collaborators using cryptocurrencies.
The benefits of handling employee payroll with cryptos include speed and security of payments, but it also brings new challenges to face. Therefore, it’s wise to learn how crypto payroll is conducted and what the implications of adopting this method would be.
With the rising price of Bitcoin, a large number of workers have become interested in receiving their salaries in the cryptocurrency, as they could profit later on. In the case of employers, industry giants such as Twitter have also considered paying their workers’ salaries with cryptocurrencies. So, in the years to come, it will be very common to find companies that have implemented crypto payroll in their day-to-day operations.
Benefits of crypto payroll
Security and control
As the cryptocurrency world matures, the benefits of crypto payroll increase. The security of transactions is ensured by regulated exchanges and wallets, which have been in the market for some time. Thus, the process of sending or receiving funds periodically as part of a payroll can be automated and fully secure.
Moreover, if non-custodial services are involved (like Alfacash), users’ control over their funds ensures that trust is not an issue. Both employees and employers will have greater financial freedom. Security would also increase, as hacks to centralized exchanges would not be a risk.
By using cryptocurrencies, all payments are guaranteed to be transparent and recorded on the blockchain. A record of all transactions certifies that employers and workers don’t have to worry about whether payments were sent or not.
Speed, reach, and more
Today, companies with employees around the world have become trendy. Payments to other latitudes can be a real headache when done by traditional methods, as they present many regulatory constraints and can take up to a full week to complete.
On the other hand, paying the payroll with cryptocurrencies can become considerably faster (it can take just minutes to complete) and save unnecessary fees. If the employees are in the same country, there are still benefits. The speed of payments is still there, and it can become a way to give workers more control over their money.
In addition, it can be an opportunity for the recipients to diversify their finances by investing in other cryptoassets. One way to take much more advantage of the speed of cryptocurrency payments to include different assets, statistics, automatic payments, and other additional features is when companies use a payment processor (such as ALFAcoins) and receive their income directly in cryptoassets.
Crypto payroll downsides and how to overcome them
Currently, numerous employees around the world are paid in cryptocurrencies. For example, the Australian Baseball League Club Perth pays its employees in BTC. Even the incoming New York City Mayor, Eric Adams, announced earlier this month that he’s willing to receive his first three paychecks in Bitcoin.
When asked which cryptocurrency employees would prefer to receive as part of their pay, many of them would probably say Bitcoin (BTC). Although, in countries where this payment method is regulated, paying taxes is the order of the day. In the United States, for example, wages with cryptocurrencies are “taxed like other income”. This means that if workers who have received payments in Bitcoin receive earnings of more than 20% and liquidate them, they must pay the respective tax.
Besides, taxes aren’t the only drawback of receiving Bitcoin payments, as its volatility could be detrimental to both parties. Given this, a good alternative is to consider making payments with stablecoins, such as Dai (DAI) and Tether (USDT) -unless the employee prefers otherwise. This way, the benefits of using cryptocurrencies in the payment of salaries are maintained, without the disadvantages of market volatility.
Possible crypto regulations
The ease with which employees can receive payments in cryptos is proven. Despite it, one of the issues that could currently be of concern to employers is the regulation of cryptocurrencies and their legality status in the country where they are located. In many jurisdictions, cryptocurrencies don’t have illegal status; but some countries have adapted mechanisms for their regulation, which include payment of taxes and protocols to avoid money laundering.
Gathering all the data required by the authorities could be cumbersome for employers. Therefore, crypto payment processors could make things much easier. Some of them offer tools such as financial reports on incoming and outgoing transactions, which help companies keep better track of their financial operations. With this same tool, employers could keep better track of the crypto payroll.
Another added value of payment processors for companies is that usually these platforms are duly registered with the law. So, employers would have no problem using them for payroll. Hand in hand with payment processors, the crypto payroll could become the future of employer-employee relations, resulting in transparency and speed in all kinds of businesses.
Wanna accept Bitcoin and other tokens in your business or blog? You can do it safely with ALFAcoins! And don’t forget we’re talking about this and a lot of other things on our social media.
Originally published at https://blog.alfa.cash on November 21, 2021.