- Employers are using services to pay employees a portion of their wages in cryptocurrency.
- Demand for workers has persisted even amid market friction, wage providers say.
- Employees may want to be paid in crypto because they are concerned about inflation or other instabilities.
Last year, when Dana Wright joined payroll provider BitPay as a product designer, he chose to be paid 15% of his salary in Bitcoin.
This was before the crypto industry went through its worst market crash ever. But instead of dialing in his bitcoin investment strategy, he doubled down. Since the price drop, Wright has increased the portion of his salary in bitcoin to 30 percent, he told Insider.
More than $2 trillion has been lost from the market since last November. While the disaster has driven away many tourist investors, not all are fleeing. At conferences, attendees display their Invulnerable Tokens and party on decks. Crypto fans on Twitter love the opportunity Buy the dip. And in the offices of tech startups, employees are still choosing to get paid in bitcoin, showing unlimited optimism for cryptocurrencies.
In recent years, tech workers have opted to receive a portion of their paychecks in bitcoin or another popular cryptocurrency. The growing demand has led to the creation of a cottage industry of companies producing payroll software with crypto in mind.
With BitPay, Wright is not alone in his unwavering crypto enthusiasm. In fact, 74% of the startup’s 85 employees earn some or all of their paychecks in crypto, making bitcoin the most popular, according to a company representative. They remain strong even as their prices drop.
It seems to be the case with other startups as well. Payroll provider Dell helps businesses hire and pay people in other countries, and last November began offering people the option to receive their paychecks in crypto. In the first six months of this year, about 5% of all payments were made in cryptocurrencies such as bitcoin or ethereum, according to Dell data. For more than 40 years, the percentage has remained stable even as inflation has risen sharply.
And Bitwage, which offers bitcoin payment services, saw the highest transaction volume in May and June – “despite everything else happening,” Bitwage CEO Jonathan Chester told Insider. The amount of money flowing into the operating system and the desire to pay employees in cryptocurrencies remains strong.
To be sure, the currency that workers earned last year is now worth much less. Bitcoin’s price was recently around $20,800, down 70% from $68,000 in November 2021. But many people assume that the value of their investments will continue to grow and view the recent free fall as another blip. .
“The value of bitcoin goes down, sometimes people ask for more payments in bitcoin,” said Merrick Theobald, vice president of marketing at BitPay, where Wright works.
Insider spoke to a former Coinbase designer, who said he chose to take a percentage of his salary in bitcoin. The company converts that salary amount into bitcoins, regardless of the price on payday, he said.
“I’m happy with this decision,” said the designer, who asked not to be named because Coinbase did not allow him to speak. “It makes perfect sense for a company that pioneered this space to offer this as an option for their employees.”
The first companies to offer such benefits were crypto startups like Coinbase and BitPay, said Caitlin Holloway, a former head of human resources and now a partner at Seven Seven Six. Late last year, she began noticing traditional tech companies stacking up. They see crypto-compensation as a way to attract candidates in a tight job market.
By law, employees can choose to be paid in crypto using services that are paid a percentage of their after-tax earnings. If they later sell their holdings, they’ll be taxed again if the crypto is worth more than when they originally received it, said Bruce Adams, a financial advisor at Northstar, a provider of financial security benefits.
Employees are told to “diligently keep track of the date they received the digital asset and the market value when they received the asset,” so they can calculate the amount to be paid for capital gains tax.
“If an employer is withholding funds for taxes on their behalf, they can work with a tax advisor to determine if they are taking enough deductions,” Adams said.
Instead of trying to strike it rich, workers may choose bitcoin over dollars. They may worry about inflation or other instability in their local currency markets, Theobald said.
In Argentina, where fiat currency is particularly volatile, BitPay has a handful of independent contractors. Five of the contractors receive more than 90% of their salary in crypto, according to a representative of the company. And Dell said employees in Latin America accounted for roughly two-thirds of crypto payments made through its payroll service in the first six months of this year.
It’s no secret that the crypto market is brutal. Employees should do their own research to understand the risks.
Theobald tells people to invest only what they can afford to lose. “If you need this money to live on for the next week, you might not.”
