stablecoin Payment of salary or sending employees to collect their own wages

Each salary is ultimately used to pay rent, groceries, transportation or utility bills. stablecoin can be transferred from one wallet to another in a matter of seconds, but this does not mean that employees are able to spend the money immediately. They may still need to convert stablecoin , cost currency into bank accounts and pay various expenses along the way.

This issue is becoming more important as a growing number of companies are rolling out stablecoin payroll services. The Galaxy Payroll Group announced the launch on September 2 and plans to have it rolled out in phases by September. Deel, which already offers stablecoin , updated its guidance for employers on September 17, emphasizing that paying with stablecoin does not relieve an employer from existing obligations regarding wages, taxes, deductions and declarations.

Neither of the announcements reveals how many employees chose stablecoin or how much money would be saved by doing so. But they do point to a basic question: who is going to pay for getting wages from their employers into something that workers can actually use?

Employers' legal obligations do not disappear because of stablecoin

Paying stablecoin does not automatically change the employer's legal liability. Employers are still required to calculate how much is owed, which deductions apply, what currency wages are denominated in and how this payment meets local wage regulations.

An example is provided by U.S. federal regulations such as the Fair Labor Standards Act regarding minimum wage and overtime pay, which requires payment in cash or circulating bills that can be paid at face value.

This does not mean that all forms of crypto compensation are prohibited. The rules may be different for additional pay, independent contractors and workers in other countries. But employers cannot assume that the original wage requirements will automatically lapse as soon as employees agree to accept cryptocurrency .

Details on the issue of fees are equally critical. Suppose an employer promises $2,000 after taxes, but actually issues stablecoin for $2,000. If employees pay a fee to convert these $ stablecoin into available funds, they may end up with less than the promised $2,000 in cash.

Therefore, both employers and employees must be clear about what is being promised: a certain amount in local currency, a certain number of stablecoin , or an amount after deduction for expenses. This should be made clear before the payday rather than waiting until the employee pays rent to find out.

stablecoin salary of $2000, not necessarily equal to $2,000 available

To give a simple example, an employee receives $2,000 in exchange for stablecoin . If the total cost of converting and withdrawing is 1%, he actually gets 1980 dollars. The 1% here is just illustrative, not the current market rate.

stablecoin payroll can still be cheaper than traditional methods. An employee working across borders may have paid high bank or remittance fees in the past. Therefore, what really needs to be compared is not just the transfer fee on blockchain , but the total process cost of converting a salary member into actual available funds.

The exchange rate risk is also not negligible. stablecoin may always be close to $1 like $ USDC but the employee might live in a country where both rent and food are denominated in another currency. As soon as the dollar changes against local currencies, the actual local purchasing power of wages will change with it.

There is a similar problem with speed. Although it's convenient to receive stablecoin in seconds, the advantage of this speed would be greatly discounted if it takes hours or even days for the currency to be exchanged at cost. The real issue isn't how quickly blockchain confirms transactions but rather how fast employees can actually spend their money.

Receiving token is just part of the payday

stablecoin salaries can also cause real problems that are not encountered in normal bank accounts.

As an example, Circle's USDC clause distinguishes between customers and other holders who are eligible to redeem their USDC directly with Circle. It also covers freezing addresses, legal restrictions, and redirects. This means that receiving the USDC does not necessarily mean employees can redeem it directly to Circle.

Many employees may have to rely on exchanges or other services in order to exchange USDC ≫. If such services limit accounts or delay withdrawals, the employee will see money in his wallet but not use it。

Taxation is also an issue. According to the US Internal Revenue Service (IRS) guideline digital currency , service fees paid at digital currency are measured in dollars upon receipt; employment taxes and reporting requirements apply equally for cryptocurrency issued as a salary. Additional record-keeping obligations may arise from subsequent sale or exchange of cryptocurrency .

The UK's Employment Class crypto asset guidelines also set out the income tax and national insurance obligations that must be met by an employee gained through employment. In other words, being pegged to the US dollar does not mean that employment and tax rules have disappeared.

For employers, stablecoin is much more than just a quick and easy way to send money. They need to consider deductions, taxes, conversion costs, employee records, and what they can do if employees are unable to withdraw or exchange funds.

stablecoin could still make the payroll system better: it might reduce international payment costs, get funds in place faster or provide a US dollar channel for employees when they need them. But the real test is simple: fast transfers only make sense if the employee can actually spend that money.

For a worker, the important thing is never how fast his wallet arrives but how much money he can get out of his salary when it comes time to pay rent.