Crypto as a salary? Why some labor laws agree while others do not
Besides the exchange operations between currencies, in recent years, we usually run across the word “cryptocurrency” when browsing the internet. Cryptocurrency, by definition, is a kind of digital currency and is not administered by any country. This digital currency is used mostly in trading, and in recent years it is also used to purchase merchandise online. Even with a wide usage, Crypto however is still not authoritative according to the local labor law in many countries and has not yet been brought to use widely as a salary payment.
Why is paying a salary with cryptocurrency not legal according to local labor law?
Each country has a different regulation on what should go into the compensation packages that are regulated under the labor law, including minimum wages and overtime pay. Some of the reasons cryptocurrency hasn’t been authorized for most countries to be transacted as a salary are:
1) It has not been recognised as an exchangeable unit in daily life and online shopping;
2) The value of this currency is unstable, combined with many other unit types of cryptocurrency makes its value even more unstable;
3) Cryptocurrency’s volatility is hard to predict and control;
4) The cost, the procedures, and the potential risk of the digital wallet security during currency conversion cause many difficulties for cryptocurrency keepers.
As an exception to the above reasons, there are existing countries that have legalized Cryptocurrency. According to coinmarketcap, the two only countries to adopt Bitcoin as legal currency at the current time are El Salvador and the Central African Republic. Besides these two countries, in a recent study of Chohan (2022) presented a list of other countries where cryptocurrencies are legitimate but still have some restricted depending on the local constitution:
Oceania: The use of Bitcoin will not be fined as cryptocurrency is accepted by the Reserve Bank of Australia and New Zealand, especially Bitcoin.
Europe: The countries of the EU in general are open to cryptocurrencies (e.g., Belgium; France; Ireland; United Kingdom; Croatia; Germany; Switzerland; Ukraine; Estonia; Finland; Lithuania; Norway; Sweden; Bosnia and Herzegovina; Bulgaria; Italy; Malta) and Bitcoin is not treated as illegal. Up to date, there is no particular code on the usage of Bitcoin as a monetary device.
South and Central America: Venezuela is notably active in the cryptocurrency sector as the establishment of the Petro is a state-backed crypto instrument whose emission is supported by the state’s oil assets. While Chile does not have any banned law toward the use of Bitcoins. The same as Chile, Nicaragua and Costa Rica do not restrict Bitcoin. Caribbean countries like Jamaica, Trinidad, and Tobago evidently treat Bitcoin as legal.
North America: United States; Canada; Mexico.
Asia: Indonesia; India; Japan; South Korea; Taiwan; Malaysia; Philippines; Singapore; Brunei; Uzbekistan; United Arab Emirates.
The benefit of using EOR service
With all of the unclear agreement on the usage of Cryptocurrencies, if international companies wish to bring Cryptocurrencies into practice, EOR service might be the answer.
Small or medium businesses usually turn to the employer of record services in order to enhance organization development speed in the context of globalization into the international market. As well as eliminate the complicated process of setting up a foreign subsidiary, diversify and attract more employees. The top benefit of the employer of record services are:
– Reduce finance costs and time-consuming in company operation
– Risk mitigation
– Legal payroll administration
– HR management system
– Handle the local authority regulations and policies
The other potential attractive benefit is that many employers of record services are bringing the cryptocurrency into consideration to become one of the payroll currencies, including Slasify. Slasify allows employees to pay their global talents with USDC. Talents will then receive their compensation package in the local currency or in any currency that is acceptable according to the talents’ local labor law including cryptocurrency. By using the employer of record (EOR) service offered by Slasify, employers will have the flexibility to use any kind of currency without having to worry about the legal compliance. This will save employers time and resources in dealing with ensuring the right currency to provide compensation for their global talents.
Slasify is the EOR platform which helps businesses run more confidently and legitimately around the world with over 150 countries. Slasify provides paycheck system with 130 currency units. Since the beginning of 2022, Slasify has added USDC as an official exchange unit for employers and employees under certain conditions. Slasify can cover the cryptocurrency exchange procedure and make it easy to convert to local currency and direct payment.
The compliance regarding cryptocurrency as a salary currency
It is beyond question that Cryptocurrency is really catching our eyes these recent years. It has a lot of potential and benefits to fit the 4.0 digital transformation. But employers need to keep in mind that to become utilize cryptocurrency as a payroll, they need to master the knowledge about the trade market, the cryptocurrency’s conversion value, trading procedures, wallet policies and securities, and most importantly labor legal law. Apart from the issues mentioned above, the potential risks, the data security, and its volatility are the essential matters when dealing with cryptocurrency.
Slasify a global employment company that enables employer to have the flexibility to pay contractor and permanent employees in any currency including USDC. Now employers can utilize cryptocurrency without having to worry about the labor compliance. If you are thinking to take your USDC out of your crypto wallet to compensate your international teams, get in touch with our expert to realize that!
Slasify is designed for remote worker. We provide payroll calculation, social security payment and tax filing in more than 150 countries around the world, allowing business owners/talents to seamlessly connect with the world. We have practical experience in serving the world’s top 100 companies. If you have relevant needs, please feel free to contact us.
In addition, if you are a “remote worker” or are on the way to becoming a “remote worker”, and if you want to know more about it, you are welcome to visit Slasify’s website. If you have any questions, you are welcome to write an email to us!
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