By Pranesh Anthapur, Director of Human Resources at Kraken
Payroll capabilities are growing alongside vast improvements in blockchain technology. With these innovations, employees around the world may want to have a wider range of digital asset options, such as NFT, cryptocurrenciesand Bitcoin IRAs.
Let’s explore why and how to give employees unprecedented control over their financial future.
The Global Case for Crypto Payroll
At Kraken, we are proud to offer Krakenites an automated way to receive their salary in crypto if they choose. Many Krakenites are able to purchase cryptocurrencies through net payroll deductions each pay period, creating an easy way to average cost in dollars in a cryptocurrency of their choice. More than a third of our Krakenites choose to receive at least a partial salary in crypto. In fact, many of them choose to receive their entire salary in crypto.
Crypto payroll options aren’t just for those working in the crypto industry. At some companies, contributors to U.S.-based 401(k) retirement plans can invest in Bitcoin alongside stocks and mutual funds. The craze for cryptocurrencies is spreading to the general public.
- Research conducted by NYDIG reveals that 36% of employees under 30 have expressed interest in having part of their salary paid in bitcoin. Additionally, about a third of these employees – if given the chance to choose between two comparable positions at different companies – would prefer the one that offers to pay them in Bitcoin.
- A recent Frequent survey revealed that younger generations are more open to the idea of crypto as an alternative payroll option. Those aged 18-40 are the most receptive: Millennials (55%) and Generation Z (56%). Baby boomers (33%) are the least receptive.
Bitcoin and Ethereum, the two most traded cryptocurrencies, are leading the way in terms of popularity and investment enthusiasm. People of all ages tend to favor Bitcoin (62.7%) and Ether (26.5%) over USDC (8.7%) and Tether (1.4%). This suggests that investors have confidence in the profit potential of these digital assets.
- A Investopedia survey We found that Millennials are the most invested, with 38% of them already owning cryptocurrency.
Cryptocurrency is well established as an investment asset and global payment method. But its long-term value proposition for businesses goes well beyond that and delivers more benefits on a global scale.
Five reasons to offer crypto as a payroll option
There are many benefits to integrating blockchain payments into your organization:
Recruit the best global talent
Crypto, by nature, is globally inclusive. You can leverage the benefits of crypto to recruit and retain top talent who may not prefer to be paid in their local currency. Employers can send money around the world without incurring the costs of traditional wire transfers or bank transfers.
Crypto also offers employees the ability to customize their benefits package. Employees can allocate a portion of their net income to a choice of cryptocurrencies, such as bitcoin, ether and other stable coins.
Secure payments at low prices
Employers can now avoid setting up subsidiaries and setting up bank accounts for their staff in different locations. At little cost, employees can create their own crypto wallet, also called a crypto wallet. hardware wallet. This is a type of wallet used to store and secure cryptocurrencies. It is a physical device that stores users’ 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 employee onboarding. Wallets typically cost a few hundred dollars and can be a smart perk to help your employees secure their digital assets.
Dollar Cost Schedule
Each payment period, employees have the opportunity to receive cryptocurrencies, gradually accumulating cryptoassets through cost averaging. This strategy involves investing a constant amount of money in an asset at regular intervals. By taking this approach, employees’ fixed payment amounts will automatically purchase more crypto when prices are lower, and less when prices are higher.
In some countries, employees may face high inflation environments with their home currency. Cryptocurrencies and stablecoins can offer an alternative to hyperinflationary local currencies, allowing employees to make their own financial decisions. Offering employees their payroll in cryptocurrency is a great way to show that your company cares about their financial freedom and sovereignty.
Sustain your employer brand
By 2025, three quarters of the world’s working population will be made up of millennials who will exert considerable influence on the future of work. Employees entering the workforce are now looking for future-focused perks and benefits to support their lifestyle and values. If employers embrace the future digital economy, they will modernize an employer brand fit for the future of work.
Things to Consider About Crypto Payroll
Even for a crypto-native company like Kraken, it is crucial to remain vigilant about the ever-changing landscape associated with crypto payroll. Consider the following:
Ensure regulatory compliance
Different countries have various crypto regulations, and these laws can change quickly. Be sure to consult legal counsel and confirm that any crypto payroll platform you select has a built-in compliance layer.
Understanding the tax implications
Employers should understand the tax regulations related to crypto payroll in their jurisdictions. Different tax authorities may classify crypto payments differently, impacting tax obligations. Proper recordkeeping and reporting, including documentation of fair market value, is essential to compliance.
Withholding tax on crypto payments, like traditional payroll, is important to avoid penalties. It is advisable to seek advice from cryptocurrency tax specialists due to the complexity of crypto salary taxation.
Using a crypto exchange for payroll can be risky because some exchanges are more vulnerable to hacking. It is therefore essential that businesses take additional measures safety precautions when using crypto exchanges for payroll. Do your own research and find reliable and secure crypto solutions.
Build Financial Freedom with Crypto
In light of existing and potential economic challenges, it is critical that employers recognize the impact of employee compensation on engagement and retention, as well as the growing demand for diverse payment options.
By offering crypto as an alternative payroll choice and harnessing the potential of blockchain-based compensation, employers can demonstrate innovation, drive global inclusiveness, and take proactive steps for the future well-being of their employees .
Are you or your business new to crypto? We believe crypto shouldn’t be enigmatic. Learn more about blockchain, crypto and NFTs here:
These materials are intended for general information purposes only and do not constitute investment advice or a recommendation or solicitation to buy, sell, stake or hold any crypto-asset or to engage in any trading strategy. specific trading. Kraken will not make any effort to increase the value of the cryptoassets you purchase. Some crypto products and markets are unregulated and you may not be protected by government compensation and/or regulatory protection programs. The unpredictable nature of crypto-asset markets can result in losses of funds. Tax may be payable on any returns and/or increases in the value of your cryptoassets and you should seek independent advice on your tax situation. Geographic restrictions may apply.