The world of cryptocurrencies is going from strength to strength and it is becoming more obvious that it has the potential to substantially disrupt the way we live our lives. With governments now jumping on the bandwagon and a huge under-the-table -payment process for freelancers, many are wondering- is it legal to pay employees or freelancers with Bitcoin?
The simple answer is “maybe”. The IRS in America considers and treats Bitcoin like property and there is every possibility that the Department of Labour will not consider it in the same way as the American dollar. This means that if you pay your staff with Bitcoin or another cryptocurrency, there is the likelihood of you getting into trouble for not paying them the minimum wage. This would apply in any jurisdiction where the definition of cryptocurrencies and whether they are a security, a currency, or property, is something of a grey area.
There are however tax issues to take into account if you do decide to risk it. First of all, you need to be aware that as crypto coins are considered property by the government, you need to file for them as such. This will also depend on how your coins were acquired.
What does the future hold?
Even with these issues, the concept of cryptocurrencies fulfilling the role of a proper form of payment is not unrealistic and it could be on the way quicker than we think. Companies such as Ecobank have managed to amass over 3 million clients in just 6 months- a clear indicator that regardless of the governmental standpoint on such coins, the tides are continuing to turn.
The truth is that the overall implications and the potential of such technologies truly transcend borders and eliminate the divides that exist between human beings. Companies such as Bitwage and Unocoin are working hard for cryptocurrencies to become the new means of international payment, and with no issues like hefty transaction fees or sky-high conversation rates, it is not hard to see what the attraction is.
The impact that cryptocurrencies are having on our culture is impossible not to notice. Governments, corporations, and stakeholders from almost every sector are beginning to use blockchain technology for a wide range of purposes. Financial companies such as Quickbooks have even started creating new ways for cryptocurrencies to be able to be included in invoices. Not only is cryptocurrency tech being used, but it is being developed, evolved, and innovated on to make other systems more efficient. There is no doubt that it is just a matter of time before all currencies are treated in exactly the same way
How will it happen?
Quite simply, the systems are not quite in place to be able to take a final decision as to whether cryptocurrencies can be considered as actual currency or not. This means that by paying your staff with Bitcoin or the like, is risky. With that in mind, how on earth is it going to happen? There seems to be a lot of progress in the right direction when it comes to Bitcoin and the like, but for them to be used successfully as an actual form of wage-payment, quite a few things need to happen.
In America for example, the Department of Labour will have to make an official decision on whether it is good enough to be considered as a cash equivalent. Secondly, the semantics need to be properly thought out. For example, if a company decides to pay its staff in cryptocurrency, they should consider outsourcing their payroll. Consideration also needs to be given to the fact that the value of coins such as Bitcoin is extremely volatile. Some people do not want or like change and such a drastic shift from traditional methods could result in some needing a lot of convincing.