Dive into The Rise Guide to Crypto Payroll to understand how businesses can integrate cryptocurrencies into their compensation structures, explore its benefits, challenges, and envision the future of payroll in the web3 era.

What is Hybrid Fiat and Crypto Payroll

Hybrid fiat and crypto payroll is a payment system that blends traditional fiat currencies with crypto to compensate workers. This innovative payroll method is pioneering a more flexible future of compensation as well as a cost-efficient and scalable means of cross-border remuneration. 

Allowing for diversification in compensation options, hybrid payroll aligns with the growing interest in crypto as a form of payment. 

Recent findings revealed that one third of millennials and half of gen z would enthusiastically receive a portion of their salary in crypto. With forecasts indicating that in five years these two generations will comprise 58% of the workforce, integrating their demands into business strategy is integral for maintaining a competitive edge in recruitment. 

On the flip side, many crypto-native businesses, including decentralized autonomous organizations (DAOs) operate on-chain and hold their treasuries in crypto. Providing traditional fiat payments to their teams becomes no easy feat as they have to first off-ramp their crypto through a centralized exchange, incurring multiple swaps and fees, and significant delays before funds reach their bank accounts. 

For those that are paying their contractors and contributors in crypto, many are spending countless hours issuing manual wallet to wallet transfers, which are prone to human error and accounting issues. 

A seamless hybrid payroll solution designed for the modern workforce offers crypto-friendly businesses and DAOs a solution to both the complications associated with fiat to crypto payments as well as crypto to fiat payouts, while even automating  crypto to crypto batch payments without needing to complete manual wallet to wallet transfers each pay period.

Can You Pay Employees in Crypto?

In the United States, while it is perfectly legal to remunerate contractors in crypto, the legality shifts slightly with regard to paying salaries to employees. This is influenced by several factors which include state-by-state discrepancies and the volatility of crypto’s value, which, in the face of matters such as minimum wage, can present challenges. 

There are, however, inconsistencies in statements made by the Federal Government and the IRS. While the Fair Labor Standards Act requires regular or overtime wages to be paid in cash, the IRS, in it’s FAQ section on Virtual Currency Transactions, gives the following response to the question of whether crypto paid by an employer constitutes wages:     

“Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes.”

Legal and regulatory Considerations When Paying Employees in Crypto

If an employer is determined to offer some form of compensation benefits in crypto to their employees, there are legal and fully compliant methods by which this can be achieved. 

To start, an employee’s base salary must be paid in fiat currency. From there, however, any additional bonuses can come in the form of crypto. As a best practice, although it is not a legal obligation, it is highly recommended to obtain written consent from an employee to document their agreement to this alternate form of remuneration.

Consider engaging a third-party crypto payroll provider to streamline the process and ensure compliance with tax and legal regulations. Since paying employees in crypto does not exempt a company or its employees from tax obligations, a comprehensive crypto payroll solution that can handle tax forms is a critical tool for avoiding the costly fallout of noncompliance. 

The Best Ways to Pay Workers in the Crypto Industry

The rising demand from the global workforce for expanded opportunities to receive hybrid crypto and fiat payments has left many employers grappling with how to implement such payments effectively. 

Direct Crypto Payments vs. Conversion Services

As the payroll sector evolves, the debate between direct crypto payments and currency conversion services intensifies. Currency conversion services provide convenience, but direct crypto payments offer greater flexibility and typically lower fees.

Choosing direct crypto payments allows employers to grant employees immediate access to the crypto world, staying true to the decentralized spirit of cryptocurrencies. This is crucial for DAOs, which operate as on-chain entities. Handling all HR tasks within the decentralized framework not only saves time but also aligns with their core values.

Moreover, this approach minimizes reliance on conventional financial middlemen, leading to additional savings from avoiding conversion service fees.

Tax Implications and Reporting

Despite being an alternate form of payment, crypto wages are still subject to the same taxation as fiat wages. The IRS gives a clear outline of exactly what is expected when it comes to paying taxes on virtual currencies: 

“Consequently, the fair market value of virtual currency paid as wages, measured in U.S. dollars at the date of receipt, is subject to Federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement

Introducing the Future of Payroll: Hybrid Fiat and Crypto Payroll

In today’s dynamic economic landscape, offering packages for compensation and benefits that encompass a diverse range of currencies is a business imperative for future-facing organizations. 

Hybrid fiat and crypto payroll allows for flexibility on both ends for the employer and the worker. Solutions that are built to facilitate hybrid transactions ensure that a company can fund payroll in the treasury of their choosing- fiat in a traditional bank account or crypto in a digital wallet, including popular stablecoins, such as $USDC- and workers can choose to cash out their paycheck in their preferred currency. 

Hybrid systems have advantages across various types of organizations. For US-based companies that want to remunerate employees in crypto, these systems provide a compliant framework to pay wages in fiat currency and benefits and incentives in crypto. 

For DAOs that want to expand their payout options to contributors, incentivizing work with fiat compensation is made possible with on-chain hybrid payroll solutions. 

Expanded remuneration that includes payment in stablecoins has risen as a particularly appealing option. While crypto has not fully shed its reputation as a high-risk asset, stablecoins represent a middleground for those wanting to hold funds in a non-government controlled currency without taking the full leap to investments in crypto. 

This is exhibited in the explosive growth that stablecoins have seen over the last few years. In July of 2023, the market cap for USDt alone topped $80 billion, which marked an increase of more than 730 percent in just three years. Stablecoins are expected to grow to nearly $5T over the next five years, up from $125B as of August, 2023.

Adopting a contemporary approach to payroll that includes fiat, crypto, and stablecoins balances traditional financial options with innovative new systems, effectively catering to the diverse financial preferences of the modern workforce. The integration of crypto into payroll and payment funding sources is both a demonstration of a company’s adaptability and an investment in giving their workers financial freedom and flexibility. 

The Differences between Hybrid Payroll and Traditional Payroll

While traditional payroll involves payments in fiat currency funded by a treasury held in a traditional bank account, hybrid fiat and crypto payroll involves the inclusion of crypto held in a self-custody digital wallet or stored with a custodial service, such as Coinbase. 

Technical Differences 

To start, traditional payroll relies on payees having access to a bank account. With hybrid payroll, this is neither a necessity nor a limiting factor; regardless of geographical location or access to banking services, with hybrid payroll payees can choose the options to receive payouts via their digital wallets. 

To process hybrid payroll, when compensation is in crypto, rather than going through a centralized authority or a third-party intermediary, payments are processed via blockchain technology. All transactions are recorded on a public ledger, providing transparency and traceability. 

Due to the volatility of crypto, a different set of treasury management strategies must be implemented when holding part of one’s treasury in crypto. A key consideration is ensuring liquidity and mitigating the risks of currency fluctuations. A lack of liquid assets can devastate a project, thus it is imperative to have sufficient cash flow for executing payroll and covering operational expenses. 

Companies that are Onboarding with Hybrid Solutions 

Native to web3, DAOs have been early adopters of hybrid crypto payroll solutions. While in many instances contributor compensation comes in the form of a project’s native token, for well-established DAOs or those that have adopted a more inclusive approach, a system for hybrid payroll is used.   

This follows in line with diversified treasury management strategies that aim to ensure liquidity through not holding all of one’s treasury in a single token, in this case, a DAO’s native token. Hybrid payroll also serves as an incentive for contributors; rather than only receiving tokenized compensation, contributors have more flexibility with the introduction of fiat options.

Another early adopter of this form of payroll are web3 startups who, like DAOs, typically hold a large percentage of their treasuries in crypto. As entities that are often deeply involved and invested in blockchain technology, using a hybrid payroll system aligns with foundational principles of decentralization and innovation.  

While web3-native organizations were first to implement crypto payroll and hybrid payroll systems, traditional businesses that are crypto-friendly and seeking versatile ways to compensate workers have been eager to jump on the bandwagon. 

Whether as an option extended for contractor wages or as an alternate means of receiving bonuses and incentive packages, crypto lends these traditional companies a competitive hiring edge.

The Benefits of Using Hybrid Fiat and Crypto Payroll 

The increasing popularity of employing hybrid fiat and crypto payroll systems has opened new horizons in the world of compensation for web3-based organizations and traditional companies alike. From attracting tech-forward talent and accessing global hiring markets to reducing transaction costs and increasing efficiency, crypto payroll brings with it many advantages.  

Attracting Talent 

In today’s fiercely competitive hiring landscape, the battle for top talent has intensified and traditional compensation packages are no longer sufficient when it comes to attracting the best and brightest recruits. Adopting cutting-edge technologies like crypto payroll has become a strategic necessity. 

Beyond the many benefits crypto provides as a form of remuneration, payment in crypto represents an alignment with the future of finance and technology. By offering crypto compensation and integrating decentralized finance into HR, companies not only gain a competitive edge but demonstrate a forward-thinking approach that attracts tech and crypto-savvy talent. 

A pivot in the direction towards embracing blockchain technologies fosters financial flexibility and signals a commitment to staying at the forefront of a rapidly evolving global job market. 

Streamlined International Payments

A pre-pandemic trend that was accelerated by the mass-exodus towards remote work, businesses are now more than ever before expanding their hiring practices across international borders. Yet managing cross-border payments and complying with a myriad of currency regulations can be a complex and costly endeavour. 

Hybrid crypto and fiat payroll thus takes center-stage as a transformative solution. Leveraging blockchain technology, crypto payroll offers unprecedented efficiency and transparency when it comes to international payments.

By sidestepping traditional financial middlemen and their associated fees and delays, organizations can streamline payroll processes, ensuring that workers receive their earnings promptly and in the currency of their choosing. This can mean the difference between waiting on multiple days for the arrival of a wire transfer and a matter of seconds for money sent via a blockchain transaction. 

The immutable nature of blockchain transactions further reduces the risk of costly errors that can arise with greater frequency when navigating foreign financial entities. When onboarding HR and payroll with a crypto-friendly solution that takes care of international compliance, both risk and hassle are exponentially decreased. 

Reduced Transaction Fees

A principal pull that has drawn many businesses to adopt systems for hybrid compensation is the measurable reduction in transaction costs. Traditional cross-border as well as local payments often incur substantial fees associated with intermediary banks, currency conversions, and administrative overhead. 

Blockchain technology, however, provides an antidote to expensive and cumbersome systems of the past. Hybrid crypto payroll offers a direct and cost-effective channel for financial transactions. The elimination of intermediaries directly translates to significant cost savings due to the circumvention of fees associated with banks and currency conversions.

This is highlighted when comparing options for sending money, such as wire transfers, with transactions on blockchain networks. Arbitrum for example, averages a 15 second block time with transactions costing as low as $0.2 - $0.3. Wire transfers in comparison appear increasingly archaic with their multi-day delays in arrival and fees that can reach $50.  

The Challenges Facing Crypto Payroll

Despite their many benefits and transformative potential, crypto payroll and hybrid crypto and fiat payroll are not infallible solutions.  

Regulatory and Legal Hurdles

Taxation of crypto payments varies greatly from one jurisdiction to the next. Companies issuing crypto payroll must diligently adhere to tax regulations and stay vigilant in monitoring the ever-evolving compliance laws governing its use as a form of compensation. 

When companies issue crypto payments on a global scale, they face the choice of either acquiring expertise in both local and global tax regulations or engaging a service provider capable of managing this work for them. Figuring out the best approach based on a company’s needs and resources is an essential first step in order to ensure total compliance based on each country's unique laws governing income reporting and tax withholding. 

While for many jurisdictions crypto earned as wages is reported no differently than fiat, for others there exist specific reporting regulations.

If these are violated, the cost can be a high one; in Japan, a man was sentenced to a year in prison and a fine of $20,000 for crypto tax violations.  

Managing Crypto’s Volatility 

One of the main downfalls (or benefits, depending on the market) of crypto is its high volatility. Fluctuations in the value of crypto assets can present challenges when it comes to accurately calculating and maintaining a stable payroll balance. As a result, questions of ensuring liquidity must be addressed early on. 

Taking a proactive stance is not optional, but a fundamental feature of managing a crypto treasury. A prudent recommendation is ensuring enough liquid assets to satisfy payroll and operational expenses for up to a year.   

Employee Training and Adoption 

While on the whole a diversity of remuneration options is a major plus, there will always be workers who need extra incentivizing with regards to adapting to new technology. This inevitably results in more time and resources invested in providing employee training and education. Despite initially representing a cost, the work put in at the onset quickly pays off once the cost savings and time efficiency of the hybrid payroll system are reaped. 

How to Choose the Right Crypto Payroll Platform for your Business

In recent years, crypto payment platforms have begun popping up in a financial landscape that, up until recently, was structured to primarily facilitate fiat transactions. With more options now available for incorporating decentralized finance in HR processes and crypto compensation into payroll, figuring out the right hybrid or crypto payroll solution for your organization can be confusing. 

By taking into account an organization’s unique requirements and existing infrastructure, solutions can be compared to identify which ones provide the most comprehensive services and robust ecosystems to allow for a smooth transition and optimized integration. 

Key Features to Consider 

One of the first elements to take into account when making a decision about which hybrid payroll system to onboard with is its currency offerings. These need to speak to the currency in which a company holds its treasury as well as the currencies in which workers want to receive their compensation. 

An example of this can be seen with ZenAcademy, a digital space built with the mission of empowering a robust web3 community. With a treasury held in crypto and stored in digital wallets, they needed to find a platform that could support payroll funded directly from a digital wallet rather than a traditional bank account. 

Depending on the country’s in which a company’s workforce are based, if offering a hybrid system with fiat options, these options must align with the respective country’s currency. Similarly, if the organization is a DAO, ensuring that payroll can include the project’s native token is nonnegotiable.  

Payment flexibility

In line with ensuring expanded currency options, payment flexibility not only encompasses catering to employee preferences and company treasuries but speaks to flexible routing and pay schedules as well. 

While there are many options on the market that allow for payments to be made in crypto and withdrawn by employees in that same currency, there are few that provide a built-in routing layer. It is a major benefit to onboard with a hybrid payroll system that allows for companies to fund payroll in the currency of their choice- whether fiat or crypto- and payees to receive payouts in their preferred currency. 

Compliance with Local Tax & Payments 

Depending on where a company is based and how far-flung their international teams are, choosing a system that can provide compliance services across a wide range of jurisdictions is key. Furthermore, not every crypto payment platform handles tax forms. This additional benefit can represent significant time savings as well as the avoidance of costly noncompliance errors.

Another compliance feature to prioritize is the currency in which payments are issued to workers. For US-based companies and DAOs, the ability to finance payroll in USD or USDC while allowing workers and contributors to receive payouts across a wide range of currencies means the difference between ensuring compliance and facing issues of noncompliance.

By issuing all payments in USD or USDC, tax complexities for both worker and employer are mitigated. Additionally, swapping USDC for USD does not trigger a taxable event in most jurisdictions, with the worker still technically getting paid in USD thus allowing for simplified tax reporting.     

Security and Reliability

When choosing a crypto payroll system, a multi-faceted approach to security and reliability that offers a robust encryption protocol is of paramount importance. This should include multi-factor authentication and comprehensive cybersecurity measures to safeguard sensitive financial data from potential threats. Evaluating a platform’s compliance with industry standards and regulations, as well as seeking feedback from other users can provide valuable insights into the system’s dependability. 

How to Get Started with Hybrid Fiat and Crypto Payroll

Whether you are a web3-native organization ready to onboard with a payroll platform or a traditional company looking to incorporate crypto into current payroll offerings, with the right solution, the process should be frictionless.  

Once the best-fit payroll platform has been identified, the follow-up steps include connecting either the company’s bank or digital wallet and onboarding and educating employees. 

Depending on the services that the platform offers, additional steps may involve the uploading of tax documents, drafting automatable professional service agreements and SOWs, and creating automated pay schedules. 

Choosing a Crypto Payroll Solution

As more crypto payroll solutions and hybrid fiat and crypto payroll services emerge, understanding the distinguishing features and advantages of each one is key for making the best choice for your business. 


Rise is a comprehensive crypto and fiat payroll and compliance solution designed for both traditional companies and web3-native organizations. One of its standout features is its unique flexibility; with Rise, companies can fund payroll in the currency of their choice- from fiat in a traditional bank account to stablecoins in a digital wallet- and payees can receive payouts in their preferred currency, in 90 fiat currencies and 100 cryptos across multiple blockchains, including Ethereum, Arbitrum, Optimism, Polygon, and Avalanche. 

With a core commitment to ensuring compliance across all fiat and crypto payroll transactions, with Rise, all payments are recognized as being made in USD. So while employers can fund payroll in fiat or stablecoins and payees have the freedom to withdraw remuneration directly through Rise across 190 currencies, tax ease and compliance are guaranteed through the initial issuance of USD-based payments.  

Rise helps scale international payroll with automated global payouts and enhanced security through the RiseID, the platform’s self-sovereign on-chain identity minted by all Rise users. Beyond payroll, Rise streamlines the hiring process by conducting KYC checks in minutes, automating professional service agreements and SOWs, and handling global tax forms. 

Request Finance

Request Finance is a blockchain-based payroll platform that caters to the unique payment challenges of web3-native organizations, including crypto companies and DAOs operating in a global and remote-first landscape. 

Companies can use the tools built into the Request platform to streamline invoices and expenses all while leveraging blockchain technology.

While Request provides the payroll layer, what it lacks is the infrastructure for streamlining HR processes and workforce management. 

Utopia Labs 

Offering banking service and treasury management for crypto firms and DAOs, Utopia Labs began by tailoring their crypto-first solution to address the diverse financial needs of blockchain-native organizations. Utopia prioritizes cost-efficient and expedited transaction processing for crypto offramping, all while maintaining strict compliance standards. 

Beginning in November, Utopia will no longer offer crypto payroll solutions to crypto startups and DAOs. 


Toku’s core mission is centered around streamlining token-based compensation and ensuring tax compliance, offering tools for token payroll management and streamlined, one-click global payouts. 

Recognizing the growing demand for compliant, international crypto compensation, Toku is a dedicated expert in local and global regulations and employment laws across 100 countries to guarantee full tax compliance for all of their token payroll operations.  

While Toku is a great option for companies that are operating exclusively in the crypto sphere, it is very limited when it comes to those that want to offer expanded options for remuneration since it does not provide hybrid payroll services.


Stepping up to meet the demands of a remote workforce that is constantly growing and evolving, Franklin is a contemporary payroll solution built to adeptly address cross-border payments and payroll administration. 

While Franklin supports ERC-20 tokens and over 300 digital wallets, it has limited flexibility due to the fact that payments can only be crypto to crypto or fiat to fiat, rather than a combination of the two. This is a major disadvantage for companies that want the ability to fund payroll in crypto while allowing payees the option to withdraw payments in fiat, crypto, or stablecoins (or vise versa). 


Deel serves as a simplified payroll solution for remote workforce management. It offers companies the ability to onboard and oversee their employees while ensuring compliance with labor and tax regulations. 

Deel provides a secure and versatile payroll processing system which accommodates various payment methods including direct bank transfers and crypto compensation. 

Despite allowing for crypto payments, Deel does not operate within the DeFi ecosystem and instead goes through Coinbase, a centralized exchange. This poses a major drawback for companies seeking a web3-native platform that supports self-custody. 

The Future of Crypto Payroll

Global crypto regulation is evolving at breakneck speed and the adoption of blockchain technology across industries is keeping pace. 

As sectors from healthcare and insurance to fashion and finance begin integrating blockchain technology and decentralized finance into HR operations, there’s an increased demand for adaptable hybrid solutions that sit in the middle of the web2 to web3 spectrum. 

This is further evidenced by projections that anticipate global spending on blockchain solutions to reach $19 billion in 2024. With Starbucks accepting Bitcoin and Goldman Sachs using POAP, to remain relevant in a competitive market, organizations must prepare to integrate blockchain technology or risk becoming obsolete.