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How to Get Paid in Bitcoin as a Contractor or Employee

With near-instant transfers and low fees, cryptocurrency can be an enticing way to get paid. Here’s how to get paid in Bitcoin.

Owen Yin
Written by Owen Yin
January 25, 2022
Contents
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Key takeaways

  1. There are three main ways to get paid in Bitcoin: Traditional peer-to-peer exchanges, custodial crypto wallet exchanges, and do-it-yourself conversions
  2. Independent contractors can withdraw their Deel balance using Binance. The funds are withdrawn in BUSD, Binance’s US dollar-backed stablecoin
  3. If you’re a US employee, you may choose to be paid in crypto through our partnership with Coinbase

Crypto has shaken up our concept of money. Bitcoin (BTC) has become the leading digital currency, with companies like Starbucks, PayPal, and Microsoft adopting it as a standard means of payment for products and services. Now, people aren’t just interested in how to make purchases with Bitcoin—they want to know how to get paid in Bitcoin, too.

Some companies offer their employees the option of getting paid in Bitcoin (or other cryptocurrencies) using crypto payroll. Crypto payroll is an exciting in-road for employees looking to break into digital currency. But regulations around cryptocurrency are complex and still in flux. If you’re interested in getting paid in crypto, like Bitcoin, you’ve found the right guide. 

Disclaimer: This content is valid at the time of publication. Please refer to your local laws and regulations on cryptocurrency payments for the most up-to-date information.

How to get paid in Bitcoin

There are three main ways to receive crypto payments like Bitcoin:

  • Traditional peer-to-peer exchanges
  • Custodial wallet exchanges
  • Do-it-yourself conversions

Peer-to-peer via non-custodial wallets

Both parties need to set up a digital “wallet” to store their coins to make cryptocurrency transactions. Different coins require different wallets—you’ll need a Bitcoin wallet to store Bitcoin. These wallets are non-custodial (also called self-custodial), meaning you’re in charge of the wallet address and its accompanying private key.

Once each party has a digital wallet, they can start to make crypto transactions using decentralized blockchain technology. A blockchain is a system that records transactions made in Bitcoin or another cryptocurrency.

Crypto network transactions require some technical expertise. Tools such as Metamask simplify procedures.

Adding a transaction to the blockchain takes computing power, so the network charges a fee. Network fees can vary significantly by the hour, so take this fluctuation into account. 

The infrastructure behind Bitcoin payments has developed significantly. Services like BitPay can automatically generate and send standardized crypto invoices, speeding up the payment process.

Once your crypto arrives, the coins are yours to keep. Nobody can move these funds unless they possess your private key, so you must keep it in a safe place.

Exchange via custodial wallets

Alternatively, transfers through a custodial wallet exchange minimize network fees and simplify the payment process. Exchanges provide you with a crypto address to use with a custodial wallet, but they store the key for you.

Do-it-yourself crypto pay

Suppose an employer isn’t offering crypto as a form of payment yet. In that case, you can convert your paycheck dollars that are deposited into your bank account or sent via direct deposit into crypto by buying crypto from an exchange. Keep an eye out for extra transaction fees or network charges in the blockchain. For example, you usually incur a charge for buying crypto with a credit card.

Advantages of getting paid in Bitcoin

Getting paid in Bitcoin appeals to workers and companies with global workforces because it offers near-instant transfers and low fees. Advantages include:

It’s fast

Cryptocurrency’s most significant benefit is speed: transactions settle almost instantly, compared to traditional SWIFT transactions, which can take weeks.

It’s direct

Crypto transactions take place on a peer-to-peer network without an intermediary financial institution. If I send you Bitcoin, it goes directly to you. Thanks to the peer-to-peer structure, all Bitcoin transactions are permanent, visible, and secure.

It’s decentralized

Crypto’s peer-to-peer network sidesteps centralized authorities that control the supply of traditional currency, like banks and governments. In other words, crypto’s value is independent of government or financial institutions. 

It’s an investment

Unlike traditional fiat payments, crypto has the potential to rise in value. Employees could end up collecting far more than their base salary if the value of crypto appreciates. (Of course, it also has the potential to depreciate over time, which we’ll discuss below.)

It’s enticing

Almost nine in ten American adults have heard of crypto, and about 40% of American millennials own them. For that reason, many employees, independent contractors, and freelancers now pursue crypto payments. A signing bonus paid in crypto could make for an attractive offer. 

At the same time, flexible payment options like crypto withdrawals might make some organizations—such as startups and those in the tech and media sectors recruiting digital-savvy workers—stand out from their competitors and attract talent.

Disadvantages of getting paid in Bitcoin

Cryptocurrency is still finding its place in financial and governance systems, so it’s prone to volatility and limited in many areas. Disadvantages include:

It’s volatile

Cryptocurrencies are volatile. Bitcoin alone sees significant price surges and plummets in the span of only a few months. This instability makes Bitcoin an unreliable basis for wages and fringe benefits. Employees could potentially walk away with less than their base salary by accepting cryptocurrency payments.

It has a suspicious reputation

Crypto user addresses are pseudonymous, so crypto is often associated with illicit activities such as money laundering. As a result, companies may refuse to participate in the Bitcoin network to avoid reputational risk.

It’s not globally accepted

Countries use inconsistent terminology to describe crypto, have unique rules and tax treatments, and change regulations often. For instance, the language to describe Bitcoin and other cryptocurrencies might be “digital currency,” “digital assets,” “virtual commodity,” “payment token,” “cyber currency,” or “crypto assets.”

Inconsistent verbiage adds complexity to international transactions that must comply with financial regulations, like wage payments.

It’s not integrated with existing systems

It’s challenging to tie Bitcoin to existing legal money flows. Although crypto-based systems (decentralized finance) are growing, many existing financial systems don’t work with crypto, limiting usability.

How is Bitcoin regulated?

Bitcoin and other cryptocurrencies are not real money or legal tender in many countries. The exceptions are El Salvador and the Central African Republic, which have made Bitcoin legal tender.

One of the most comprehensive reviews of global crypto acceptance was conducted in 2018 by the Library of Congress’s Global Legal Research Directorate. The review surveyed 130 countries regarding their government and central bank stance on Bitcoin mining and payments. It identified very diversified treatments, ranging from permissive to restrictive.

Countries with friendly regulation

In the most crypto-friendly regulatory landscapes such as the US, Bitcoin is a “money services business.” It falls under more stringent regulations and is taxed differently than traditional currency by the Internal Revenue Service (IRS). The IRS treats Bitcoin as property for taxation purposes.

Countries with restrictive regulation

Many countries ban cryptocurrency altogether. The US Library of Congress Regulation of Cryptocurrency Around the World identifies nine countries with an absolute ban on crypto, meaning owning or trading crypto is considered illegal. The nine countries with official bans are:

  • Algeria
  • Bangladesh
  • China
  • Egypt
  • Iraq
  • Morocco
  • Nepal
  • Qatar
  • Tunisia

42 countries have implicit bans on cryptocurrencies, meaning the government has placed restrictions on banks and financial institutions from dealing with crypto or offering services to crypto providers.

These broad restrictions currently make it impossible to offer a Bitcoin wage on a global scale.

Taxes on cryptocurrency

Cryptocurrencies are taxed differently from country to country. In the European Union, Bitcoin is exempt from VAT (value-added tax) in light of a 2015 Court of Justice of the European Union ruling. They consider Bitcoin “a supply of services.”

In Israel, Bitcoin is a taxable asset. In Switzerland, it’s a foreign currency. Argentina and Spain treat it as income tax, while Denmark treats it as income tax with deductible losses. In the UK, on the other hand, corporations pay corporate tax, unincorporated businesses pay income tax, and individuals pay capital gains tax on crypto profits.

Accepting a salary in crypto would be treated like any other income for tax purposes. Companies must report payments in local currency for income tax purposes. Crypto could have additional tax appeal for high earners. In the US, profits from Bitcoin have capital gains tax that ranges between 0–37%.

Bitcoin’s dissonant tax regulations signal the difficulty of offering Bitcoin salaries to employees. Payroll departments for international teams may struggle to track which regulations to follow when paying employee salaries.

Is crypto wage legal?

Even in countries where Bitcoin is legal, it may not be legal to pay employees in Bitcoin—at least directly. Many countries, including the US and Canada, require wage payments to be made in fiat currency to comply with labor standards. 

Because of this, it’s better to offer base pay in fiat currency and then partner with cryptocurrency exchange services like Coinbase or Binance, which provide streamlined payroll solutions. These crypto exchange services can convert local currency into the crypto of the worker’s choosing using crypto accounting software.

Who typically gets paid in Bitcoin?

A full cryptocurrency salary doesn’t typically exist on a significant scale. But there are notable examples of employees accepting Bitcoin as their income currency.

In 2020, NFL player Russell Okung got part of his salary paid in digital currency. Several sports clubs also announced the option of offering crypto as a means of payment.

In 2022, New York City mayor Eric Adams converted his first paycheck into Bitcoin and Ethereum, following similar moves by crypto-enthusiastic political figures like Miami mayor Francis Suarez.

Today, platforms like Deel enable workers worldwide to get paid in Bitcoin and other cryptocurrencies.

How to get paid in Bitcoin and other crypto with Deel

Deel’s mission is to create a more equitable workforce and build tools to empower companies and workers globally. We think paying your international team shouldn't be an obstacle, and crypto can be part of the solution.

Deel has integrated with Coinbase and Binance to offer flexible cryptocurrency withdrawals direct to their crypto platform account. Contractors paid through the Deel platform can currently withdraw funds in Bitcoin, Ethereum, USDC, Dash, Solana, and BUSD. Deel doesn't charge an additional fee, though there is a processing fee for stablecoin withdrawals.

If you’re a US employee, you may choose to be paid in crypto through our partnership with Coinbase. Once set up, Coinbase will automatically convert your paycheck from US dollars to crypto with no transaction fees.

Join Deel today as an independent contractor, employee, or business to gain more flexibility in your payment options.

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