Cryptocurrency and alternative salary era

Written by Pranesh Anthapur, Kraken Chief Human Resources Officer

Payroll functions are expanding with major advancements in blockchain technology. With these innovations, global employees may want a broader range of digital asset options, such as NFTs, cryptocurrencies, and Bitcoin IRAs.

Let’s take a look at why and how to give your employees unprecedented control over their financial future.

Global Case for Cryptocurrency Salaries

At Kraken, we’re proud to offer an automated way for Krakenites to get paid in cryptocurrency if they choose. Many Krakenists choose to purchase cryptocurrency through net salary deductions every pay period, making it easy to convert dollar cost averaging into the cryptocurrency of their choice. More than a third of Krakenites have chosen to receive at least part of their salary in cryptocurrency. In fact, many of them have chosen to receive their entire salary in cryptocurrency.

Cryptocurrency salary options aren’t just for those working in the cryptocurrency industry. Some companies allow U.S.-based 401(k) retirement plan contributors to invest in Bitcoin along with stocks and mutual funds. Enthusiasm for cryptocurrency extends to the wider public.

• According to a study conducted by NYDIG, 36% of employees under the age of 30 expressed interest in having part of their wages paid in Bitcoin. Additionally, approximately one-third of these employees would prefer a position that pays in Bitcoin if given the opportunity to choose between two similar positions at different companies.

• A recent Aquent survey found that younger generations are more open to the idea of ​​cryptocurrency as an alternative salary option. The 18-40 age group is the most receptive, with Millennials (55%) and Generation Z (56%). Baby boomers (33%) are the least receptive.

  Bitcoin and Ethereum’s ether, the most traded cryptocurrencies, are leading the way in popularity and investment enthusiasm. People of all ages tend to prefer Bitcoin (62.7%) and Ethereum (26.5%) over USDC (8.7%) and Tether (1.4%). This means investors are confident in the revenue-generating potential of these digital assets.

• An Investopedia survey found that millennials have invested the most, with 38% already owning cryptocurrencies.

Cryptocurrency has become an investable asset and a global payment method. But the long-term value proposition for companies goes beyond providing more benefits globally.

5 Reasons You Should Offer Cryptocurrency as a Payroll Option

There are many benefits to incorporating blockchain payments into your organization, including:

Recruiting the best global talent

Cryptocurrencies are inherently global. By leveraging cryptocurrency benefits, you can recruit and retain top talent who do not prefer to be paid in their local currency. Employers can send money globally without incurring the costs of traditional bank transfers or wire transfers.

Crypto also gives employees the option to customize their benefits package. Employees can allocate a portion of their net profits to cryptocurrencies such as Bitcoin, Ethereum, and other stablecoins.

Secure payment at low cost

Employers can now set up a subsidiary and bypass creating bank accounts for employees in other locations. Employees can create their own cryptocurrency wallets, also known as hardware wallets, for a small fee. A type of wallet used to store and secure cryptocurrency. A physical device that stores a user’s private keys and public addresses in an offline environment, providing an additional layer of security against online threats.

Consider offering a “hardware wallet bonus” on a new employee’s first day. You can also include a hardware wallet as part of new hire onboarding. Wallets typically cost a few hundred dollars and can be a thoughtful benefit to help employees protect their digital assets.

dollar cost average

Each pay period, employees have the opportunity to earn cryptocurrency, gradually accumulating cryptocurrency assets through dollar-cost averaging. This strategy involves investing a consistent amount of money in assets on a regular basis. By adopting this approach, employees’ fixed payments will automatically purchase more cryptocurrency when prices are low and smaller amounts of cryptocurrency when prices are high.

financial sovereignty

In certain countries, employees may face a highly inflationary environment due to their home currency. Cryptocurrencies and stablecoins provide an alternative to hyperinflationary local currencies, empowering employees to make their own financial decisions. Paying your employees in cryptocurrency is a great way to show that your company cares about their financial freedom and sovereignty.

A future-proof employer brand

By 2025, three-quarters of the global workforce will be made up of millennials, who will have a significant influence on the future of work. Now, new employees are looking for forward-thinking perks and benefits that support their lifestyle and values. As employers embrace the digital economy of the future, they will modernize their employer brands for the future of work.

Things to Consider About Cryptocurrency Salary

Even for cryptocurrency-based companies like Kraken, it’s important to remain vigilant about the ever-evolving landscape when it comes to cryptocurrency salaries. Consider the following:

Ensure Compliance

Different countries have different cryptocurrency regulations, and these laws can change quickly. Consult with legal counsel and ensure that the cryptocurrency payroll platform you choose has a built-in compliance layer.

Understand the tax implications

Employers should understand the tax regulations surrounding cryptocurrency wages in their jurisdiction. Different tax authorities may classify cryptocurrency payments differently, which may affect your tax obligations. Proper record keeping and reporting, including documentation of fair market value, are critical to compliance.

As with traditional wages, withholding taxes from cryptocurrency payments is important to avoid penalties. Due to the complexity of taxing cryptocurrency wages, it is recommended that you seek professional advice from a cryptocurrency tax expert.

security management

Using a cryptocurrency exchange for your salary can be risky as some exchanges are more susceptible to hacking. Therefore, it is important for businesses to take additional security precautions when using cryptocurrency exchanges for payroll. Do your own research to find a reliable and secure encryption solution.

Build Financial Freedom with Cryptocurrency

Given existing and potential economic challenges, it is essential for employers to recognize the impact employee compensation has on engagement and retention and the growing demand for a variety of payment options.

By offering cryptocurrency as an alternative pay choice and leveraging the potential of blockchain-based compensation, employers can demonstrate innovation, promote global inclusion, and take proactive steps toward the future well-being of their employees.

Are you or your company new to cryptocurrency? We believe that cryptocurrency should not be secret. Learn more about blockchain, cryptocurrencies and NFTs here.