Here’s a modern-day scenario. You make a standout candidate an offer they surely can’t refuse. Except they do — in favor of a competitor who’d offered them a cryptocurrency payroll option. You hate to let top talent slip through your fingers. So, is it time to make compensation in bitcoin and other cryptocurrencies part of your hiring strategy?
There’s plenty of evidence to suggest it is. Cryptocurrency is growing in popularity, and surveys show more interest among workers, especially millennials, in crypto as a form of compensation.
These are important talent pools, and adding crypto payroll options could help you tap into them. But before ditching the good old dollar, it’s vital to understand how cryptocurrencies work and what adopting them means for you and your workforce.
What is a cryptocurrency payroll?
A crypto payroll uses digital currency — of which bitcoin is the best known and most widely used — to compensate employees. Digital currency transactions are recorded and stored on blockchain technology, which, as its name suggests, stores transaction data in blocks that are linked together to form a chain. This stored data is a public ledger that’s decentralized and encrypted.
More and more businesses, including some big-name brands, now accept bitcoin payments for their products and services. Employers are following suit by offering workers the option of being paid in cryptocurrency, either as a portion of salaries or a bonus.
How will a cryptocurrency payroll help hiring and retention?
Crypto payrolls have certain advantages over traditional banking systems, including:
- Near-instant transactions — The nature of blockchain technology means that payments — domestic and international — are usually settled instantly. Employees can receive their compensation and cash out to their local currency with no delays.
- Transparency and efficiency — Both parties to a transaction can see when it has been processed and received, so disputes caused by banks holding up payments are a thing of the past. Transactions can also be easily located without the need to request bank statements or information from the other party.
For employers, there’s the added benefit of standing out in a competitive labor market — whether it’s in brand appeal to digital natives, signing-on crypto bonuses or incentivizing staff with instant bitcoin rewards if they’ve smashed their sales targets.
What are the downsides of a cryptocurrency payroll?
There are several reasons for employers to be crypto-cautious. Take the following into account before retooling your payroll function:
Cryptocurrencies can fluctuate wildly in market value, making them a balance sheet risk and an unpredictable method for paying salaries and benefits. Employees who receive some or all of their compensation in crypto must accept that the dollar value of this sum may vary from month to month. This, in turn, could hurt your reputation as a brand and an employer.
Regulatory and tax uncertainty
Most countries still don’t consider bitcoin and other cryptocurrencies to be legal tender. Regulations surrounding their use also vary by country, from permissive to highly restrictive. As a business, you’ll have to do plenty of due diligence if you want to offer crypto as a payment option, particularly on a global scale.
Cryptocurrencies currently don’t work within most existing financial systems — for example, for money transfers or credit card payments. Therefore, a crypto payroll would run parallel to your existing set-up, potentially adding more complexity to your operations.
4 tips for setting up a cryptocurrency payroll
You’ve weighed up the benefits and risks and want to set up a crypto payroll. Here are some tips to get you going:
- Start small — Create a pilot program that you can scale up if it proves successful.
- Determine employee interest and expectations — Assess the appetite for a crypto payroll from existing employees. If there’s enough demand, gather views on what cryptocurrencies workers prefer and what proportion of their salary or bonuses they’d like to have paid in crypto.
- Get on top of legal and tax compliance — Research and implement local regulations in all your markets so that your crypto payroll is accurately taxed and reported. Employee education is also vital — for example, they need to be aware of the tax implications of receiving compensation in cryptocurrency, which is considered property in the United States.
- Consider your vendor options — A good place to start is with a third-party cryptocurrency payment vendor, which will work alongside your payroll team to convert payments into digital currency and facilitate the transfer to employees. You could also adopt a blockchain accounting software solution, which gives you more control over your transactions.
Cryptocurrency adoption carries risks like volatility and legal uncertainty, but these can be mitigated by scaling up slowly and staying on top of compliance issues. Once it’s up and running, a crypto payroll offering could differentiate you from competitors and give you access to new and exciting talent pools.
Note: Robert Half does not endorse the use of cryptocurrency by payroll departments as an approach to paying all or some of their employees.