Q&A: Is Now the Time (Again) to Consider Crypto Compensation?

With a U.S. presidential administration now strongly supporting digital currency — perhaps most visible with President Donald Trump’s March 6 executive order to establish a strategic bitcoin reserve and a national digital asset stockpile — might now be the time to scroll ahead and get ready for when your employees ask to be paid in cryptocurrency?

Cryptocurrency payroll platforms like BitWage are now providing services to more than 4,500 registered companies to pay employee salaries in Bitcoin and stablecoins. For some employers and business observers, this is harkening back to 2020 and 2021, when cryptocurrency as a payment method was generating headlines and a bit of (short-lived) momentum.

Workspan Daily (WD) recently spoke with Fred Whittlesey, a principal consultant at Compensation Venture Group, to see what compensation professionals should consider as this trend takes shape.

“I think the real value here is that it reminds us of all the issues we have to think through if we are going to consider a fairly radical idea.”
— Fred Whittlesey, a principal consultant at Compensation Venture Group

WD: Is the United States on the verge of a president-influenced cryptocurrency wave? If so, what might this mean for employers and their employee compensation practices?

Whittlesey: I think there will be an increase in the U.S. in the use and flexibility of cryptocurrency, but in my opinion, none of this will have anything to do with its [supported or regulated] viability as a form of employee compensation.

Essentially, what the administration is proposing is both loosened regulation and the creation of a strategic reserve. That will do a couple of things, like reduce volatility and make it more feasible in some respects to use crypto in general.

But there’s still some lack of clarity on whether crypto is a currency or an asset, which can also cause some tax-reporting issues.

If all of the administration’s plans go through, it’s going to be a much more friendly environment for crypto. But they’re really designed on more of a macro level to encourage more domestic production of cryptocurrency than to encourage it as a form of employee compensation.

WD: What are the pros and cons of cryptocurrency as compensation?

Whittlesey: There’s really three layers of issues. The first is that it’s highly volatile. Four years ago, Bitcoin was at $60,000. Two years later, it was at $20,000 and now it’s at around $105,000 [as of mid-May].

It could be very complicated for comp professionals to explain the volatility risk that the employees would be looking at, but again, that may subside in a better regulatory environment.

The second layer is just pure labor and compensation law, from the Fair Labor Standards Act to 401(k) contributions. Also, if you’re going to pay someone $50,000 in crypto, the price changes 24/7, so employers will need to figure that out.

The third layer is all the tax reporting and state- and country-specific withholding rules.

If you pay a U.S. employee $50,000, you give them a W-2 and you’re done. But with crypto, every fractional payment is a separate line item for cash reporting.

Maybe that will get simpler, but there’s just a lot of technical complexity right now.

WD: What are some of the biggest things to consider before making this a formal compensation option?

Whittlesey: The biggest challenge will be employee communication. Companies are still struggling with communications around company stock plans. That’s been a problem for decades — and now, you’re taking it up a whole other level with the complexity around crypto.

So, in order to do employee education around crypto, not just comp professionals but HR generalists also will need to stay on top of what is a fast-changing topic. If someone asks why they’re getting paid in Bitcoin instead of Ethereum, or what blockchain is, they’ll need to have answers.

WD: Are many companies currently offering this option?

Whittlesey: Sure, some companies are paying their employees in crypto. If you work for a crypto company, you’re probably a big crypto fan and you might want to be paid in crypto.

But for other companies, I think they’re just saying, “That sounds cool,” or maybe their employees are seeing their friends getting paid in crypto and asking, “Can I get paid in crypto too?” But, no one’s really thought through what that means.

The crypto world can be sort of an “outlaw” culture sometimes, and the challenge for comp professionals is in stepping into something really complicated. But it’s truly going to come down to the nuts and bolts of: “Can our payroll system handle this?”

I think the real value here is that it reminds us of all the issues we have to think through if we are going to consider a fairly radical idea.

Employers have been learning these lessons going back to the early 2000s, when companies began extending stock compensation to employees around the world and learned just how complicated a process it turned out to be.

It’s an interesting idea to talk about, but ultimately the question is: What’s the real advantage?

If it’s not a win/win for employer and employee, then you really must wonder if it’s worth doing at all.

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