Crypto Payroll: A practical guide to paying your employees in BTC or USDC.

With strict employment regulations to abide by, managing a payroll across different countries can become a time-consuming endeavour. Add crypto to your compensation plan and things get even harder. To help you with that, we’ve laid out the practical guide you’ll find below. 


  • Check local employment laws and regulations in your country 
  • Educate yourself on the tax and balance sheet implications
  • Consider a stablecoin such as USDC to simplify your admin and accounting
  • Use a crypto-friendly payroll software
  • Create a crypto payroll policy document
  • Seek legal counsel on how to structure your compensation plan
  • Rush into crypto payroll without doing your research on how it could impact your business
  • Implement a system without talking to your lawyer, accountant and all relevant stakeholders

1. Check your country’s regulation for tax implications

Laws and tax regulations around cryptocurrencies vary widely from country to country.

Before switching to crypto payroll ask yourself:

  • Does the legal system of the country where my business operates in let me pay crypto salaries?
  • Are my employees resident in a country that allows them to be paid in crypto?
  • If the answer to the two previous questions is yes, what are the tax rules and laws that I need to follow?

See our table below to get an overview of the tax and legal implications in a few countries across the world.


Legal stance

Tax implications

Useful links



Treated as capital gains (investors) or ordinary income (traders only).

Cryptocurrency and tax | Australian Taxation Office

Hong Kong


Treated as income (traders) – No capital gain tax for everyone else.

Taxation of digital assets in Hong Kong - KPMG China



1% tax deducted at source (TDS) (except for some NFTs and digital assets).

India's Day Of Reckoning With ‘Most Controversial Crypto Tax’ Is Here


Unclear legal status

1.5% tax on the gross transaction value.

Brochure- Digital Service Tax



Treated mostly as commodity (income tax applies) or security (capital gains tax).

Cryptocurrency Tax Guide Nigeria 2022 | CoinText

South Africa


Treated as taxable income or capital gains – Legislation is still unclear around which applies.

Crypto Assets & Tax | South African Revenue Service

South Africa Crypto Tax Guide 2022


Accepted – legal regulations vary by state

Capital gains and taxable income (for salaries paid in crypto).

Some retirement-plan providers allow investors to put Bitcoin in their 401(k) retirement accounts

Legal Ramifications of Paying Employees with Cryptocurrency

Virtual Currencies | Internal Revenue Service

There's a push to bring bitcoin to 401(k) plans



Treated as capital gains (investors) or ordinary income (traders only).

Tax on cryptoassets - GOV.UK 



Not subject to GST. Regarded as an intangible property. Token payments for goods or services are considered barter trade.

Key tax considerations when transacting in digital tokens | EY Singapore

Why Singapore is one of the most crypto-friendly countries



Treated as income generated through conventional businesses. Occasional traders are not taxed, active traders are.

An Accountant’s Guide to Cryptocurrency - BDO

Eastern Europe

Accepted or unregulated in most countries

Treated differently by the tax offices of each country.

Regarded as property in Russia.

Cryptocurrency in Eastern Europe

Russian Taxman is Coming After Cryptocurrency Profits

Latin America

Mostly accepted and classified as tradable assets – i.e. securities. 

Most countries do not levy capital gains taxes on crypto.

A Guide to Crypto Laws in Latin America

2. Consider a stablecoin to simplify your admin and accounting

When it comes to crypto payroll, USDC has been the most popular choice to date. Here is why: 

  • It’s pegged to the US dollar, which avoids volatility and fluctuations in wages and fringe benefits
  • It’s backed by actual US dollars held at regulated and audited US financial institutions 
  • It’s available on different blockchains including Ethereum, Solana, Stellar and Algorand 
  • It’s available on both centralised and decentralised exchanges.

Crypto-friendly payroll solutions (more on this below) offer alternative crypto options, such as Bitcoin and Ethereum. Generally speaking, it’s better to stick to a stable currency. 

Besides, there are thousands of cryptos out there and it would be impractical to pay every employee in their preferred coin.

Splitting the payments

Some companies pay their staff in crypto and FIAT currency. A handful of companies offer employees the option to allocate a portion of their pension scheme contribution in crypto, too. This split system has many advantages:

  • It makes employees feel more secure
  • It helps comply with minimum wage and overtime laws 
  • It mitigates the risk of a fall in cryptocurrency value
  • It complies with the law: depending on where your business is based, it might not be legal to provide an entire pay package in cryptocurrency. 

In these cases, employers often give their employees the ability to choose what portion of their salary gets paid in crypto. 

Token awards or grants 

Token-based compensation can be a powerful form of incentive, however it does add complexity to your startup payroll. While there might not be much public information available, all the rules outlined in point one still apply. 

If you’re offering compensation that includes tokens (whether in combination with traditional equity or not), please consult with your legal counsel to decide how to identify the best structure and comply with tax codes. 

In most cases: 

  • A pre-launch token grant is structured similarly to early-stage private company stock, where employees are taxed on the exercise of an NSO (non-qualified stock option)
  • A post-launch token grant has similar attributes to a Restricted Stock Unit (RSU), where the shares received  are taxed immediately. If the post-launch token grant is subject to vesting, employees have a reportable income as the tokens vested, which are  based on the current market value). 

If you’re choosing to offer both equity and tokens, think through your approach, so that you can make compelling offers to potential employees while avoiding messy allocations that will create headaches in the future.

3. Use a crypto-friendly payroll software

You might already be familiar with traditional payroll software and how they can streamline the entire process of payments for your employees. Many payroll solutions are now adding cryptocurrency to their list of supported currencies. 

Here are a few pros and cons you should be aware of:  

  • They manage the entire payroll process from start to finish
  • They take care of tax reductions
  • They comply with the legal regulations in your country/state of business
  • In some cases, employees can pick their preferred method of payment.
  • They’re custodial, meaning they take ownership of your funds
  • Some function similarly to traditional payroll systems, which can remove blockchain efficiencies.

Another advantage of working with a third-party vendor is that they cut out the risk associated with the extreme volatility of crypto.

A vendor converts your traditional currency into the desired cryptocurrency at the current rate. They can also transfer your employees’ salaries into their digital wallets. This will give greater protection to your balance sheet.

We’ve compiled the main features of the most popular crypto-friendly payroll solutions in the table below:

Payroll Software

Main Features


  • Reporting and remittance
  • Automated tax filing and other HR compliance 
  • Employee portal and easy onboarding
  • Time-tracking
  • API integrations
  • Time and attendance
  • Applicant tracking & recruiting
  • Payroll scheduling
  • Traditional banking supported
  • No fee for incoming ACH credit or on incoming wire
  • Up to 25 fiat currencies supported
  • Same-day processing

Papaya Global

  • Employee dashboard 
  • Customised reports
  • Country-specific worker forms, invoice templates, documents, and reports
  • Third-party payments
  • HR support
  • Full benefits management and administration
  • Cross-border payments with multi-currency support
  • Tax filing assistance
  • GDPR compliant and multi-language support 
  • Customised payroll ledger
  • Integration with HRIS, ERP, expense management, and time and attendance systems


  • Locally-compliant contracts — over 200 local legal partners, to abide with team members’ local jurisdictions
  • One-click payroll — each member can withdraw earnings through bank transfers, Wise, Revolut, and Coinbase
  • Document collection
  • Worldwide payments
  • Integrations with tools like QuickBooks, NetSuite, Xero, Okta, and more


  • Simple invoicing 
  • Invoice creation based on hours
  • Custodial wallet to receive Bitcoin
  • Ability to check complete payment history


  • Real-time payments
  • No personal information required
  • Around the world payments using multiple cryptocurrencies
  • Payment tracking

4. Create a crypto costs policy

Like all company procedures, it’s best practice to create a policy document for your crypto payroll.

In addition to a traditional policy (here is a handy template you can download) a crypto payroll should include:

  • Payroll dates
  • Payroll system details, if you opt to use one
  • A standard, fixed conversion date and time to calculate payouts 
  • Any costs associated with maintaining the crypto account, managing and tracking transactions.

You can send this document to all employees and, if relevant, get them to sign it as a proof of acknowledgement and understanding. 

Final Words

The short take is: offering crypto incentives to employees introduces complexity to your startup compensation, therefore it’s imperative to equip yourself with the knowledge around the rules, options and software available before making the leap. 

Consulting with tax, law and crypto experts will help future-proof your crypto payroll so that it can be a powerful attraction and retention tool rather than an administrative nightmare.

If you’re ready to get started, we’ll leave you with a final checklist with the key steps to start a pilot program.

Crypto payroll checklist:

  • Talk with your lawyer, accountant  and insurance provider
  • Talk to other founders who have implemented this in their companies or are at least thinking about it 
  • Choose your cryptocurrency/ies
  • Set up a wallet and purchase the required coins
  • Do a test transaction for employee zero to make sure you’re set up correctly
  • Obtain employees’ wallet addresses 
  • Establish a crypto conversion rate and costs policy
  • Communicate your  policy and  tax implications with your employees 
  • Implement a crypto-friendly payroll system
  • Invite employees to the payroll system
  • Create payroll (in local currency first, then crypto) and set up payroll dates
  • Ask your employees to confirm their payslip and payment details have been put through correctly

Further reading