Paying Independent Contractors in Crypto in the United States
As the US economy buckles under the weight of inflation, the option to pay contractors in crypto becomes critical for competitive hiring.
Crypto Gains Momentum as Trust in Fiat Currency Wavers
Americans are steadily losing faith in the US dollar. The battle to fight rising inflation has come at a steep cost. As the Federal Reserve hikes up interest rates for the fourth time this year, the US populace takes yet another economic blow.
Unsurprisingly, people are not sitting passively in the face of this growing crisis. As devastating financial trends continue, 56% of polled Americans reported having little to no trust in the US government.
All this comes on the heels of crypto continuing to gain traction since its leap into popularity with the general public starting in 2020. Despite the current bear market, in 2022 56% of adults in the US reported owning or having owned crypto assets.
This makes the number of US adults invested in crypto on par with those who own stocks.
Competitive Hiring in 2023
The US job economy continues to trend towards a future of remote, online work. And of those making up the current workforce, more than half are Millennials and Gen Zers. The shift in demographics of the labor pool has brought with it changing demands.
A recent survey showed that 50% of Gen Zers and 30% of Millennials are eager to receive salaries in crypto. With their presence only continuing to grow in the workforce, it is of utmost importance for businesses to evolve to meet their appeals.
As we head into 2023, businesses can expect to make significant structural changes. Inflation and subsequent distrust in government coupled with the continued demand for the expansion of crypto point to one, clear conclusion.
To stay relevant and attract top talent, companies need to integrate crypto into their treasuries.
Getting Started with your Crypto Treasury
There are many benefits to switching over to a full or partial crypto treasury. Employing blockchain technology for payroll means safer and faster payments for contractors, and reduced transaction fees for businesses. What's more, opening your first crypto treasury could not be easier.
Three Steps to Launch Crypto Payroll:
Open a crypto treasury with a third-party vendor: To ensure that the process of converting to crypto assets is compliant and cyber secure, begin with a trusted web3-enabled platform. Efficient and user-friendly onboarding will have you ready to convert all or a portion of your company’s fiat treasury into the crypto currency or currencies of your choosing in no time.
Start paying out contractors: Give employees agency over their earnings. With expanded payroll options contractors can receive wages in their desired cryptocurrencies and convert tokens into fiat currency at any moment. Make clear to those opting for crypto payroll that all regular tax laws apply. The IRS lists wages paid in any cryptocurrency as ordinary income and tax reporting is based on the fair market value of the currency on the day and time of the transaction.
Tax laws and your crypto assets: Understanding US tax laws around holding crypto assets is critical (and simpler than you would expect!). It is only required to pay taxes if portions of your treasury have been sold or traded for another currency. In these cases, you would report either capital gains or losses. Taxes owed will depend on earnings on the given currency.
As your business begins to onboard contractors opting to earn in crypto, additional steps to ensure utmost protection are recommended. To avoid any potential complications, draft a clear written agreement in which employees consent the receival of their wages in a token that is not fiat currency. While this is not explicitly necessary for the sake of legality, it offers an additional layer of security.
Experience the Future of Payroll
One of the major draws of receiving a salary in crypto is its investment potential. Over the past few years we have seen instances of tokens increasing in value by up to 40,000,000%. So while you may not be able to give your independent contractors equity in your company, you can offer them an alternate form of meaningful economic growth. Ready to get started?
Make the transition to a crypto treasury seamless with Rise’s web3-enabled payment platform. Rise uses smart contracts on Arbitrum, a leading L2 blockchain, to ensure the highest level of security and scalability with lowered transaction times. Effortlessly convert from fiat currency to crypto, onboard employees and contractors in a series of simple steps and start rolling out wages in the token(s) of your choice.
Learn more about how Rise can optimize your company's payroll and schedule a demo today.