Cryptocurrency

A cryptocurrency is a digital currency used to acquire goods and services in which transactions are verified and records maintained by a decentralized system using cryptography. Typically, a cryptocurrency uses a blockchain technology’s secure, decentralized online ledger containing the cryptocurrency’s transactions rather than having the currency managed by a centralized authority, similar to how the Federal Reserve and U.S. Treasury manage the dollar. Examples of cryptocurrencies include Bitcoin, Ethereum, Tether, Binance Coin, Cardano, XRP, Dogecoin, and others.

As cryptocurrencies have become more widely accepted as a form of payment by the general public, there has been increased interest in the legal implications of paying employees in cryptocurrency. While there are service providers that will convert wage payments to cryptocurrencies, there are many questions that need to be clarified before employers pay employees directly in these currencies. For instance, at the federal level, the Fair Labor Standards Act (FLSA) requires that wages be paid in “cash or negotiable instruments payable at par.”

Most states require employers to pay wages by only a few specific methods, which generally include: cash (i.e., U.S. currency), check, other negotiable instrument (e.g., draft or money order payable on demand at a bank or other financial institution), direct deposit, or paycard. Note that states have their own definitions of these terms – be sure to check the laws, regulations, and/or agency guidance in a particular state for the specific requirements of use.