The method of payment is one of the biggest bottlenecks of global remote work. Just think about it: international transfer fees can be difficult, and the fact that regional tax laws and authorities sometimes conflict can be a huge deal. This is just one of the reasons why, in the past, a lot of remote workers preferred to be paid in crypto.
Now, while the global remote employee pool was smaller, no one paid too much attention to this. Today, when almost 13% of employees in the US work from home, and more and more countries around the world follow suit, this is an issue that has to be tackled as urgently as possible.
With that in mind and without further ado, here are some pros and cons of getting paid in crypto.Â
Quicker transactions
While direct wire transactions aren’t slow by any means, the matter remains that crypto transactions are a lot quicker.
Now, no matter how much the accounting and payroll get automated, the matter remains that people still run them. Accountants still prioritize the simplest payments, which means that if you decide to receive your paycheck in crypto, you might get paid earlier than some of your colleagues.
Not only that, but the fact that the process is a lot quicker also plays a role in the decision-making. Both international transactions and international remittances are a lot quicker this way.
Also, if you’re already keen on investing in crypto, it’s handy to get money this way, whether you’re getting paid in major coins like BTC and ETH or any of the other best cryptocurrencies of this year, like those featured on a list by Techopedia. Just think about it: you already have a crypto wallet, and by receiving your coins there, you can easily turn these major pairs into upcoming coins.
All you need to do is receive your funds, take a look at upcoming coins, and make a transfer. Sure, it doesn’t save that much time, but it’s far more convenient. That has to account for something.
Either way, since this is a part of the payroll and you expect to receive funds this way on a regular basis, why not just streamline it all?
Greater fiscal efficiency
Another important thing worth keeping in mind is the fact that this might end up being cheaper for everyone. After all, crypto has lower transaction fees, mostly due to the fact that there are no intermediaries. The blockchain is fully autonomous, and the democratic nature of the DeFi ensures that there are no intermediary institutions to inflate these fees.
Now, sometimes the fees are paid by the employer, but there are many instances (especially in freelance work) when they’re passed down to the recipient. In other words, the sender pays what’s on the invoice, and the fees are deducted from the money that you were supposed to receive.
Other than this, there’s the issue of exchange. A lot of vendors now accept cryptocurrency payments, which saves you the trouble of exchanging USD, EUR, or GBP into a native currency. Due to the globalized nature of the modern remote workforce, this is an incredibly important factor to consider, and it affects more people than you would expect.
Also, local banks and exchange unions may have unfavorable exchange rates. When it comes to selling crypto, major exchanges tend to offer far more favorable terms.
All in all, there are a lot of instances where receiving crypto ends up saving you quite a bit of money.
The technical aspect
In the past, paying one in cryptocurrency sounded a bit intimidating; however, we’re no longer in that period in history. Now, a lot of people already have crypto wallets. Even if they don’t, they’re at least aware of them and how to register them.
While this number may still not be as high in the general population, among remote workers, the figure is far higher. After all, we’re talking about a predominantly younger generation accustomed to working with digital tools and spending most of their time online.
In fact, the tech-savvy nature of this form of payment is so high that a lot of enterprises are seriously considering switching to crypto payments (at least as one of the potential payment options) as a PR boost. After all, this can help younger generations take you more seriously as an enterprise that doesn’t fear technological innovation.
One of the most important things you need to keep in mind here is the relevance of public image. After all, just including this as an option makes a company feel more competent. Sure, it may make their accounting a tad more complex, but paying in crypto is becoming a standard practice in the business world.
With more and more vendors accepting crypto payments, both the technical aspect of this asset’s management and the public perception of it are shifting.
Potential for appreciation
Previously, we’ve discussed that you might want to use the crypto you receive to invest in other crypto. Well, even without this idea, you still have a lot of potential for increasing your assets through depreciation.
Let’s say that you receive your paycheck in BTC, but in those few days, the value of the token increases. In this scenario, you would be richer by this appreciation money without having to put in any work or even make any decisions (other than to receive money in crypto).
At the same time, this also creates a risk of sorts. Appreciation is not guaranteed. In fact, due to the volatility of the market, you’re just as likely to encounter depreciation. Now, keep in mind that the risks are even higher than if you were to just invest. After all, you’re never investing your entire paycheck.
Tax uncertainty
In the majority of countries, crypto payment is still not adequately classified. At the very least, there’s a lack of clear guidelines. However, this doesn’t absolve remote workers and business owners from the money they’ve made just because they’re paid in crypto.
All that this means is that the decision is pushed further down the line and that it’s a lot harder to find a local accountant capable of handling these affairs.
Even without this regulatory uncertainty, the valuation challenges, on their own, are complex enough. Just determining the value for tax reporting purposes can be very difficult.
Just take one example. In most countries, you’re reporting a tax in your local currency. Well, according to some regulations, when receiving funds in USD (which many foreign businesses and remote workers do), you would have to report the amount in local currency, according to that day’s currency rate issued by the national bank. In DeFi, there’s no centralized national bank, so to speak.
While this problem is far from impossible to solve, as we’ve already pointed out, many regions still lack clear guidelines.
Now, in some regions, like South Korea, various political currents are proposing a further delay in paying taxes on crypto gains. However, this populist move doesn’t necessarily have to do anything with crypto salaries.
Crypto’s role in payroll management is the next step in its mainstream acceptance
It goes without saying that crypto transfers are quicker and have lower fees. While this would make them ideal for these types of payments, there are a few bumps along this road that have to be addressed. The issues of tax reporting, transfer fees, and the fact that a lot of people (for whatever reason) still prefer fiat payments are serving as a roadblock for further crypto acceptance. Still, with an even greater crypto adoption in the future (it’s yet to hit its peak), this might shift.
