Web3 CFO's Hacks

How to Pay Employees In Crypto

A growing number of companies and DAOs now pay their teams in digital assets. In this guide, we provide practical insights and best practices for Web3 teams on how to pay their employees in crypto.

April 10, 2023

As the world moves towards decentralization, the concept of Web3 has gained immense popularity. The ecosystem of Web3 is built on blockchain technology, and cryptocurrencies play a significant role in it. 

Many companies, including decentralized autonomous organizations (DAOs), are now exploring the idea of paying their employees in cryptocurrencies like Bitcoin, Ethereum, or other digital assets. The upsides for a worker in the cryptocurrency business or not, are thus numerous.

However, implementing such a payroll system requires careful planning and consideration. In this guide, we will provide practical insights and best practices for Web3 teams on how to pay their employees in crypto.

The Rise of Crypto Payroll

In recent years, cryptocurrencies have grown in popularity, with many businesses and individuals choosing to transact with digital currencies like Bitcoin, Ethereum, and stablecoins like USDC. 

As a result, crypto payroll apps have emerged as a new way to pay employees and freelancers in cryptocurrency. 

In this article, we will explore what crypto payroll apps are, how they differ from traditional payroll applications, the key benefits, and drawbacks of crypto-native payroll applications.

What are Crypto Payroll Apps?

Crypto payroll apps are digital platforms that allow businesses and individuals to pay their employees and freelancers in cryptocurrency instead of traditional fiat currencies like dollars or euros. With crypto payroll, employees can receive their salaries and bonuses in Bitcoin, Ethereum, or any other supported digital currency.

One of the main differences between traditional payroll apps and crypto payroll apps is that the latter is designed to handle cryptocurrency transactions. This means that crypto payroll apps offer features that are specific to the cryptocurrency world, such as support for multiple cryptocurrencies, crypto wallets, and real-time exchange rates.

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How Do Crypto Payroll Apps Differ from Traditional Payroll Applications?

Traditional payroll applications are designed to handle payments in fiat currencies. They usually integrate with banking systems, support tax calculations, and generate payslips for employees. Crypto payroll apps, on the other hand, are designed to handle payments in cryptocurrency.

While traditional payroll apps may offer some level of flexibility in terms of payment options, they are often limited to traditional payment methods like bank transfers, checks, or credit cards. In contrast, crypto payroll apps offer the ability to pay employees in cryptocurrency, which can be an attractive option for businesses that operate in the crypto space or have employees who prefer to be paid in digital currencies.

Another key difference between traditional payroll apps and crypto payroll apps is the level of security. With traditional payroll apps, employees are required to share their banking information, which can be a risk if the app is hacked. In contrast, crypto payroll apps use blockchain technology, which is known for its high level of security. This means that employees' personal information and crypto wallets are protected from cyber attacks.

Benefits of Paying Employees In Crypto

There are several benefits to paying employees in cryptocurrencies. Some of the benefits of crypto payroll are:

Faster and cheaper transactions

With traditional payroll apps, payments can take several days to process, depending on the banking system and the country. Crypto payroll apps, on the other hand, offer near-instantaneous payments. This means that employees can receive their salaries and bonuses in real-time, which can be particularly useful for freelancers who rely on timely payments.

Traditional payment methods often come with transaction fees, which can be costly for businesses that need to make frequent payments. With crypto payroll apps, transaction fees are typically lower than traditional payment methods. This is because cryptocurrencies are decentralized, which means that there is no need for intermediaries like banks to process transactions.

Increased transparency and security

Crypto payroll apps use blockchain technology, which is known for its high level of security. This means that employees' personal information and crypto wallets are protected from cyber attacks. Additionally, because cryptocurrencies are decentralized, there is no need for intermediaries like banks to process transactions, which reduces the risk of fraud or theft.

Potential for employee investment in crypto

One of the key benefits of crypto payroll apps is that they offer payment flexibility. This means that businesses can choose to pay their employees and freelancers in the cryptocurrency of their choice. For employees who prefer to receive payments in digital currencies, this can be a convenient and attractive option.

Easier global expansion

Simplified cross-border payments for a global workforce. Cryptocurrencies are borderless and can be used anywhere in the world. If your company has employees in different countries, paying them in crypto eliminates the need for expensive cross-border wire transfers and foreign exchange fees.

It can also be a way to attract global talent. Offering to pay employees in cryptocurrencies can be an attractive perk for tech-savvy and crypto enthusiasts from around the world. This can expand the talent pool available to companies that manage their payroll in crypto. 

Especially if you are looking to hire freelancers to augment your full time headcount, there are a growing number of freelancers eager to accept payments in stablecoins.

Tax Efficiency

In some countries, cryptocurrencies are treated differently than traditional fiat currencies when it comes to taxes. For example, in the United States, cryptocurrency is considered property for tax purposes. This means that businesses that pay their employees in cryptocurrency may be able to take advantage of tax benefits. Additionally, because crypto payroll apps often integrate with accounting software, businesses can easily track and manage their crypto payroll spending.

Challenges and Risks In Crypto Payroll

Despite the tremendous benefits to be had from managing payroll in crypto, Web3 CFOs need to be careful of major pitfalls to avoid. Some of the key drawbacks of crypto payroll are:

Volatility and unpredictability of crypto prices

Paying employees in cryptocurrencies can provide a number of benefits for globally-distributed companies. However, the volatility of some cryptocurrencies can pose challenges. By diversifying your cryptocurrency holdings, using stablecoins for payroll, using derivatives to hedge against price fluctuations, implementing dollar-cost averaging, and monitoring market conditions, companies can manage these challenges while still reaping the benefits that cryptocurrencies offer.

Legal and regulatory challenges

There are several legal, compliance, and tax implications to consider when paying employees in crypto across different countries and jurisdictions. Global teams like DAOs can navigate these issues.

Legal Implications: The first step is to research the legal implications of paying employees in cryptocurrency in each country and jurisdiction where the company has employees. Some countries have outright banned the use of cryptocurrencies, while others have put in place specific regulations or are still in the process of developing them. It is important to consult with legal experts in each relevant jurisdiction to ensure compliance with all applicable laws and regulations.

Compliance: Once legal implications have been addressed, it is essential to implement compliance measures to mitigate risks associated with paying employees in cryptocurrency. This includes having robust anti-money laundering and know-your-customer procedures in place, as well as ensuring compliance with data protection and privacy regulations.

Tax Implications: Paying employees in cryptocurrency can also have tax implications that vary by jurisdiction. Some countries may classify cryptocurrency as property, while others may classify it as a currency or commodity. It is essential to work with tax professionals to ensure compliance with all tax laws and regulations in each relevant jurisdiction.

Employee Agreement: It is recommended that companies have written agreements with their employees that outline the terms of payment in cryptocurrency, including the amount, frequency, and any potential risks or benefits. This agreement should also outline the tax implications and any potential legal or compliance issues.


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Setting Up Crypto Payroll

Now that the challenges and risks are established, let's tackle the main issue: how to pay employees in crypto?

Options for paying employees in crypto

The first thing to decide on is what cryptocurrency tokens, and blockchain networks to pay your employees in. Ideally, this should match the assets held in your DAO, or company’s treasury.

Most companies prefer to use a mix of stablecoins, and more volatile cryptocurrencies. According to data from Request Finance, about 60% of the crypto payroll, expense, and invoices were paid in USD-denominated stablecoins.

Paying employees using a mix of stablecoins and altcoins allows companies to give their employees the benefits of both potential price appreciation, and access to stable wages.

Establishing a reliable crypto wallet setup

Choose the best crypto wallet for your organization’s needs. Having a reliable system of crypto wallets to manage paying your employees is crucial. Security and governance is the most crucial factor to consider when choosing a wallet. The wallet should have robust security measures, including two-factor authentication, as well as multiple keys, or key shards required to approve transactions over a certain limit.  

Some wallets like MPC wallets, or custodial wallets also have a backup and recovery mechanism to ensure that the funds are safe in the event of theft or loss. However, in general, control of the wallets private keys should always remain within your team’s control.

The wallet should be compatible with the cryptocurrencies that the company intends to use to pay its employees. It should support the cryptocurrencies that are most widely accepted and traded in the industry.

Use a crypto payroll solution

Paying employees in crypto can be tedious and prone to human error. Using crypto payroll solutions like Request Finance can help to securely automate and simplify many of the workflow processes involved when paying your team in crypto.

Not only that, relying on a crypto payroll solution can also address non-operational aspects of managing crypto payroll. Namely, helping your company meet financial reporting obligations including accounting, audit, tax, and AML requirements in crypto.


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Best Practices for Paying Employees in Crypto

Establish clear policies and procedures for handling crypto payments

Employees should have a secure cryptocurrency wallet to receive their payments. Choose a reputable wallet provider to secure your own team’s crypto treasury, and educate employees on how to secure their wallets and private keys.

Set up risk management strategies to mitigate crypto volatility

Cryptocurrencies are volatile, and their value can fluctuate significantly in a short period. Consider implementing a policy that converts crypto payments into fiat currency at regular intervals to mitigate the risk of sudden price drops.

Have a backup plan in case of a crypto payment system failure or technical issues. This could include a traditional payroll system or an emergency fund to cover employee salaries.

Compliance and financial reporting in crypto

Before implementing a crypto payroll system, it is essential to ensure that it complies with all applicable laws and regulations in your jurisdiction. Consulting with legal and accounting experts is highly recommended.

Keep accurate records of all crypto transactions for tax and compliance purposes. This includes the date, amount, and value of each transaction.


In summary, paying employees in cryptocurrency can offer numerous benefits for global companies, but it is essential to navigate the legal, compliance, and tax implications across countries and jurisdictions carefully. 

By consulting with legal and tax professionals, implementing the right crypto payroll tools, cultivating robust compliance measures, and educating employees on the use and risks of cryptocurrency, companies can successfully implement this payment method while minimizing risks and maximizing benefits.

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