Crypto Payroll: An Ultimate Guide to Crypto Payments

Mayank Bhutoria

Since 2021, several companies have found a new way to attract global talents, especially millennials and Gen Z. This newfound attraction is cryptocurrency payments and Bitcoins. 

A Nasdaq press release mentions that, per a global poll, more than a third of millennials and half of Gen Z said they would be delighted if 50% of their salary is paid in Bitcoin or cryptocurrencies. 

Many global companies have already joined the bandwagon. While the list is pretty long, some of them paying their employees in cryptos are:

  • GMO Group, headquartered in Japan, has recently announced that its employees will receive Bitcoin payments. The company focuses on Internet infrastructure media, online advertising, finance, and cryptocurrencies. 
  • SC5, a Finnish internet technology company, has been paying its employees in Bitcoins since 2013. 
  •, a San Francisco based, is also known to pay its employees in Bitcoins. 

Besides, many Indian freelancers and IT professionals get paid in cryptos because it's faster and cheaper than traditional international bank transfer methods. 

What is crypto payroll?

Crypto payroll is a method where companies pay their employees' wages using cryptocurrencies instead of regular money.

This means instead of receiving traditional money like dollars or euros in their bank accounts, employees get digital currencies like Bitcoin or Ethereum in their digital wallets. This can make transactions quicker and sometimes cheaper, without the need for banks or other financial intermediaries.

What are the Benefits of Crypto Payroll?

1. Flexibility and customization

There are various digital currency options to pay the employees. While Bitcoin is just an option, there are 19000 cryptocurrency options, which means employees can choose how to get paid. It is more convenient than the traditional payment method in a single currency. 

2. Fast and direct

One of the biggest advantages of crypto payment is its speed. International employees don't have to wait to get their payment. Unlike traditional banking methods that take up to weeks, crypto payments are instant. Also, crypto transactions are direct, meaning no third party is involved. So, the payment can go directly from the employer to the employee, thanks to its peer-to-peer network.

3. Possible tax rebates

Some countries like Germany, Singapore, Hong Kong, Switzerland, Thailand, Puerto Rico, Malta, and Seychelles are crypto tax-free. A few other countries have significantly lower taxes when paying employees through crypto. Thus, crypto pay helps employers to cut costs through tax rebates. 

4. Cost and time-saving

Unlike the complexities of opening bank accounts for employees in their respective jurisdictions, opening a crypto wallet takes just a few clicks. This saves costs for the employers. Additionally, the traditional banking network like SWIFT is slow and deducts high charges for cross-border transactions. Crypto payment saves time and cost for both the employer and the employees. 

5. Hedge against FX fluctuations

While global teams have members worldwide, dealing with currency rate fluctuation is risky.  Crypto payroll ensures that the employees receive fair pay despite the fluctuations in the currency. 

6. Independent of currency conversion

Unlike traditional currencies, cryptos have the same value across all countries. So, a crypto salary will have the same value in India, France, and Colombia. 

What are the Challenges of Crypto Payroll?

1. Fraud risk

Cryptocurrency is not yet integrated with the banking system, meaning you must invest separately in a crypto brokerage firm for crypto transactions. Since crypto transactions are pseudonymous and no financial institutions are involved in confirming the receiver's identity, there are associated fraud risks. 

2. Irreversible crypto payments

Since cryptocurrency is decentralized, no bank or financial institution has a hold on it. If you need to request a refund, you must rely completely on the individual account holder to whom you make the payment. 

3. Value functional risk

Since cryptocurrency is like stocks, the value can go up or down anytime. You might face tax litigations and noncompliance if the crypto value exceeds a threshold limit. 

4. Tedious process

Doing a crypto payroll for the first time may be tedious because each crypto payroll needs multiple approvals. Plus, there are chances of human errors like paying in the wrong wallet address or paying double. Also, it’s easy to lose track of crypto payments. 

For example, tracking the accounts that have been paid and the ones pending. It’s difficult for the finance team to manually check if the crypto salary has been credited for each account before confirming their beneficiaries. 

By partnering with an EOR like Gloroots, you can easily process crypto payments. Gloroots supports and manages crypto payroll, making it easier for you to pay your international workforce on time.  

5. Financial reporting

Financial reporting is complicated when you have crypto payroll for your employees because there’s no way to tag them to your company’s accounts. Further, it also creates difficulties in the employee and employer tax assessment because the tax calculation depends on the employee's jurisdiction. 

Tax Implications of Crypto 

Different countries have different crypto tax implications. For example, the IRS issued a notice in 2014 that all virtual currencies, including cryptocurrency, are treated as property for Federal income tax. The notice provided examples of how the long-established tax principles applicable to property transactions also apply to virtual currency transactions. 

Here are a few examples of crypto tax implications in countries worldwide.

1. India

The cryptocurrency tax implications have changed in India after the 2022 financial budget. It introduced a 30% tax, applicable surcharge, and 4% cess levies by the Central Board of Direct Taxes on the profits arising from crypto transactions. Additionally, there is a 1% Tax Deducted at Source (as per Section 194S of the Income Tax Act) if the transaction exceeds INR 50000 or INR 10000 (in certain cases). Indian exchanges deduct the TDS automatically. 

2. UK

The UK does not have any cryptocurrency-specific law. It considers crypto as property. It mandates crypto exchanges to register with the UK Financial Conduct Authority (FCA). For crypto payments or transactions, one must fill out cryptocurrency-specific reporting documents, anti-money laundering, and combating the financing of terrorism (CFT). 

In the UK, cryptocurrency tax depends on the nature of the transaction. For 2023, a tax-free allowance is applicable for £12,570. Anything above this will be subjected to a 20-40% tax. 

3. United States

The US government considers crypto as property or investments, not currency. In the US, the amount of crypto tax payable depends on how much you earn, the specific transaction, and how long you’ve held the asset. 

As of 2022 and 2023, the following crypto tax rates will apply if you hold the asset for 365 days or less.

                                                                                              Tax year 2022 - Tax rates on long-term gains

Tax year 2022 - Tax rates on short-term gains
Long-term cryptocurrency tax rates for 2023
Tax rates on crypto gains 2023

4. Singapore

Singapore classifies crypto as property. The Monetary Authority of Singapore offers licenses and regulates crypto transactions in the country. The guidelines stated in the Payment Services Act make Singapore one of the safe havens for crypto transactions as it doesn't tax long-term capital gains. However, taxes are levied on companies that regularly conduct crypto transactions as this is a capital gain. 

8 Best Practices for Crypto Payroll

1. Get employee authorization 

While it’s not compulsory, it's always good to have written authorization from your employees that they want a part of their salary in crypto. That way, you will have written documentation to refer to later in case of any disputes. Work with your legal and HR team to draft the declaration document.

2. Partner with a crypto agency

Consider partnering with a third-party agency instead of buying the cryptos and holding them until the payroll generation. If you're collaborating with an EOR like Gloroots, it accepts crypto payments. 

3. Pay minimum wages in local currency

Some countries may have strict crypto guidelines. For example, the US labor law needs employers to pay minimum wages and overtime in the US dollar. The bonuses can be paid in Crypto. 

4. Remember the taxes

If you’re paying your employees in crypto, don't forget to consider the taxes. Employees need to pay taxes on the fair market value of the crypto salary, and they owe capital gains on selling crypto at a higher value. 

5. Check the country’s local tax implications

Before making crypto payments to employees, ensure the local country of the employee has legalized crypto payroll. If the answer is a yes, follow up with tax implications as well. 

Here are a few countries’ local crypto tax implications:

Country Legal stance Tax implications
USA Legal regulations vary from state to state. Capital gains and taxable income for crypto salary.
UK Accepted Treated as capital gain for investors and ordinary income for traders
India Accepted 1% TDS at source
Malaysia Accepted Treated as income generated through conventional business.
South Africa Accepted Treated as taxable income or capital gains
Australia Accepted Treated as capital gains for investors and ordinary income for traders

6. Choose a stablecoin

Choosing a stablecoin will help you streamline your admin accounting process because paying every employee in their preferred cryptocurrency will be difficult. 

7. Split the payments

Instead of paying the whole amount in crypto, consider splitting the payment. For example, paying the bonus or the pension scheme contribution in crypto. 

Splitting the crypto pay has many advantages. It makes the employee feel safe while the employer can comply with the minimum wage law. Even if there is a fall in the crypto value, the employee won't suffer much, and the employer stay compliant with the local law where the employee is based. 

8. Use a crypto-friendly payroll software

If you already use payroll software, you are familiar with its benefits. It streamlines the entire payroll process. But if you plan to introduce crypto payroll, ensure your payroll software supports crypto transactions. Having a crypto-friendly payroll software will ensure the payroll processing is taken care of end-to-end, you stay compliant with the laws, and the tax reductions are taken care of, too. 

How to Choose the Best Crypto Payroll Software

1. Compliance and Security

Select crypto payroll software that is tax-compliant and capable of managing cryptocurrency payments securely. It's essential to protect sensitive employee data and navigate the tax implications of crypto transactions.

2. Cryptocurrency Support and Integration Capabilities

Opt for software that supports major cryptocurrencies (e.g., Bitcoin, Ethereum, USDC) and offers seamless integration with your current business systems, including custom blockchain token integration.

3. Cost-effectiveness and Efficiency

Find affordable crypto payroll software that doesn't compromise on efficiency. Look for features like automated payroll processing, tax calculation, and no hidden charges.

4. Customer Support and Software Reliability

Ensure the software provider is known for excellent customer service and reliability. Check customer reviews and seek feedback from industry peers.

5. Scalability and Ease of Use

Choose software that can grow with your business and is user-friendly, facilitating quick adoption and minimizing the need for extensive training.

In conclusion

If managing international payroll has kept you from hiring globally, partner with an EOR that seamlessly manages multi-currency payments and crypto payroll.

Gloroots makes hiring remotely easy and risk-free for global companies, giving you complete transparency to view where your funds are used. The platform also ensures 100% compliance with the local laws. It supports multi-currency and crypto payroll.

Want to know more? Get in touch today. 

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