Is Receiving Crypto Salaries a Good Idea? Experts Discuss 4 Drawbacks to Consider
As the freelance industry continues to grow, many are embracing the concept of being a “crypto worker,” opting for crypto payments over traditional salaries for increased flexibility.
A recent survey found that 93% of freelancers globally prefer to be paid in crypto or stablecoins. This shift is driven by the frustration of dealing with foreign exchange challenges, transaction fees, and exchange rate fluctuations when working with international clients. Crypto payments offer a solution by simplifying payments and removing these obstacles.
Experts caution that there are potential pitfalls to consider when accepting crypto salaries. Felix Shipkevich, founder of Shipkevich PLLC, highlights the challenges posed by KYC and AML regulations. The volatility of cryptocurrencies like Bitcoin can lead to fluctuations in value, impacting freelancers’ income. While stablecoins offer more stability, their value is still linked to potentially risky assets.
Additionally, freelancers must navigate a steep learning curve, understanding digital wallets, blockchain technology, and the complexities of crypto transactions. The ever-changing crypto regulations add another layer of complexity, requiring specialized accounting assistance to ensure tax compliance.
Daniel Krupka, from Coin Bureau, points out the complications that arise when calculating taxes on crypto earnings, especially with volatile cryptocurrencies like BTC. Determining whether gains from holding onto Bitcoin constitute capital gains or regular income can be challenging, potentially overshadowing the initial appeal of crypto payments for freelancers.
Converting crypto to cash, or off-ramping, can also present hurdles depending on the location. Strict regulations in countries like the Netherlands can limit the amount of money that can be moved off an exchange without providing personal information.
Stablecoins are touted as a more reliable option for payments, offering a straightforward solution for freelancers new to the crypto space. They also provide an opportunity to earn a yield within the crypto economy. However, challenges may arise when dealing with banks that may be hesitant to facilitate crypto transactions, especially when converting earnings into fiat currencies.
Despite the drawbacks, Rebecca Liao, CEO of Saga, remains optimistic about the future of crypto payments for freelancers. With increasing support from legislators and presidential candidates, she believes that once comprehensive crypto legislation is in place, freelancers will have more opportunities to receive payment in stablecoins.
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