36% of Employees Want To Be Paid in Crypto: What Are the Pros and Cons?

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An increasing number of workers are interested in getting paid in alternative assets, a new study finds found it. According to research conducted by SoFi36% of employees want the option to receive some or all of their salary in cryptocurrency, and 42% want to receive NFTs as performance-related pay.

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But is this actually a good idea? There is a lot involved, both good and bad.

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There is a lot of fun in getting paid in crypto

Whether you are an employee, a freelancer or a small business owner, receiving the fruits of your labor in cryptocurrency can make getting paid feel even better.

Crypto payments are instant

When you accept crypto as payment, you cut out the middleman – the bank. That means you don’t have to wait for banks to do whatever they do while checks are cleared and direct deposits are pending. With crypto, transactions are instant.

Cryptocurrency is fashionable

Even if you never process a single payment with Bitcoin or Ethereum, giving your customers or employees the option can be good branding. Crypto is a popular trend and most companies do not accept or pay with it. That puts those who do that on the cutting edge.

Merchants avoid credit card transaction fees

Merchants pay transaction fees for the privilege of providing their customers with the convenience of using a credit card. If you don’t use plastic, you lose sales. If you do, you’ll pay an average of 1.7% to 2.05% per swipe for card transactions by 2022, according to Merchant Cost Consulting. Card-not present transactions cost more, and there is a flat fee, usually about 10 cents per transaction.

Cryptocurrency transactions, on the other hand, can be done for nothing or close by.

Say goodbye to annoying chargebacks

Chargebacks add an extra layer of protection for customers, but for businesses, these credit card chargebacks are frustrating and expensive. Chargeback fees range from $20-$100 each, according to Verifi, and each dollar lost to chargeback fraud costs $2.40 — each $100 chargeback costs the merchant $240.

Crypto does not offer that kind of protection. Once completed, a crypto transaction cannot be undone, so there are no chargebacks.

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But there are also plenty of downsides to consider

It’s not all roses. Cryptocurrency is still unknown to most, not widely accepted and full of risks. Please consider the following before taking it as payment.

The value of your payment may change without warning

Even with inflation, $1 today will be worth about the same in a few days, weeks, or even months. This is not the case with crypto, an asset class defined by gut-wrenching volatility. Bubbles, crashes and wild price swings are the rule, not the exception.

If you had received one Bitcoin to exit on December 27, 2021 last year, you would have paid $50,640.42. Just 11 days later, on January 7, your payment would have been worth just $41,557.90 — and that’s not unusual at all. If that had happened with cash, it would have meant that society would collapse.

Your ‘money’ is vulnerable and you are on your own

The reason merchants can avoid the headache of chargebacks is that once a crypto transaction is completed, it is completed. The customer does not have a fraud protection number to call, there is no FDIC insurance and Mastercard cannot cancel the transaction.

Crypto crime, hacking and scams are common, and if your account is hacked or you become the victim of a scam or other crime, your money is gone for good – because it was never real money.

There is a learning curve and a technical curve

Cryptocurrency is not regulated by the Securities and Exchange Commission, it is not traded on the stock market, it cannot be bought or sold directly in ETFs, and it is not traded on standard currency exchanges. To receive payment in cryptocurrency, you need to open an account and a digital wallet on a special exchange. It’s not difficult to launch a service like Coinbase Commerce, but most are not familiar with it.

Do you think taxes are a pain now?

The IRS taxes cryptocurrency holdings as capital assets such as bonds and stocks, according to Coinbase. When you buy crypto and leave it in the exchange or in your digital wallet, you pay no tax on it, according to NextAdvisor. But if you use it as a medium of exchange — if you trade it for goods or services, sell it for dollars, or trade it for another kind of cryptocurrency — it is taxed on the basis of capital gains or losses. If you receive it as payment, it will be taxed as income according to your tax bracket.

If you receive cryptocurrency instead of cash as payment, you must report that cryptocurrency’s US dollar value as income to the IRS. Remember:

It’s up to you to keep track of every transaction – crypto exchanges rarely send 1099-B forms.
Crypto prices are highly volatile – you must report the value of the coin the moment you receive it.
It gets more complicated every time you move your coins out of a wallet or exchange – you have to track every transfer.
You probably need specialized professional tax help, at least for the first year.

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Gabrielle Olya contributed to the reporting for this article.

About the author

Andrew Lisa has been writing professionally since 2001. Andrew, an award-winning writer, used to be one of the youngest nationally distributed columnists for the nation’s largest newspaper syndicate, the Gannett News Service. He worked as a business editor for amNewYork, the most widely distributed newspaper in Manhattan, and as a copy editor for TheStreet.com, a financial publication at the heart of the Wall Street investment community in New York City.

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