Paying Employees With Bitcoin – Is This Good?
First and foremost, it’s important to understand that Bitcoin doesn’t have a consistent, set value; its value is entirely based on global exchange rates, and dependent on the way it is sold online.
Bitcoin is a virtual currency that is used for certain online transactions, but it is the online trade market that has made Bitcoin become very valuable. The trade value of Bitcoin has been extremely volatile, but it currently sits around the $9,000 mark.
Due to the highly publicised rises of value for Bitcoin, some forward-thinking employers have been floating the idea of paying employees in Bitcoin instead of more mainstream currencies. And some employees may be happy to accept this form of payment. This should be approached with caution, however.
Tax companies treat Bitcoin and other virtual currencies as property, rather than capital. And most countries’ national legislation dictates that employers pay their employees with cash or other “negotiable instruments” that meet a consistent value. With Bitcoin being property, it’s very likely that national establishments won’t accept Bitcoin as legal tender for the purposes of paying wages.
With this in mind, the best approach for paying employees with cryptocurrency is to offer it for things like bonuses. Tread carefully when doing this, though, because a bonus can be considered to be part of a person’s contracted salary in the form of overtime. A Bitcoin payment as a bonus, therefore, should only be made as a discretionary gift, or a payment that has no correlation to hours worked, efficiency atained or production achieved.
It is commendable for employers to be creative with how they compensate employees and reward performance. In the case of cryptocurrencies, however, a little discretion is in order to ensure wage-per-hour compliance is met, and there are no breaches of national regulations or legislation.
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