[ad_1]
Miami Mayor Francis Suarez continues his mission to make Miami the crypto capital of the United States – and indeed the world. In a video interview this week, he told Bloomberg Technology that the job was a “top priority.”
But to progress, Suarez still needs the approval of the authorities in Tallahassee. Currently, Miami is not even allowed to hold cryptocurrency on its balance sheet. The mayor is pushing for this and two other measures: First, he wants residents of Miami to be able to pay fees and possibly taxes in Bitcoin (BTC). And second, he wants to be able to pay the city’s workers in crypto. âWe will be launching a tender in October to allow our employees to be paid in Bitcoin,â he said.
Other organizations, notably Twitter, have played with the idea of ââcrypto salaries. And big sports figures like Russell Okung of the NFL and Cade Cunningham of the NBA have made headlines asking to be paid in crypto or converting their salaries into cryptocurrency.
One Email a Day Could Save You Thousands
Expert tips and tricks delivered straight to your inbox that could help save you thousands of dollars. Register now for free access to our Personal Finance Boot Camp.
By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.
Are cryptocurrency salaries a good idea?
If you or your business is considering cryptocurrency payments, this is not something to be taken lightly. There are a lot of factors to consider, including the following.
1. How will the crypto portion of your salary be calculated?
If you are considering receiving crypto salaries, it is important that you understand the nuts and bolts of the proposition. For example, are you planning to convert a percentage of your salary into crypto each month? If so, make sure you know what the conversion rates will be, who will pay the fees, and what platform / wallet you will be using.
Unless your employer has huge crypto reserves that they will use for salaries, it is extremely unlikely that they will want to trade a full salary in Bitcoin or Ethereum (ETH). This would expose you and them to the volatility of the crypto market. Until crypto payments become more mainstream (assuming they do), this is a pretty risky option.
2. Are you ready for crypto volatility?
If you are considering accepting a cryptocurrency salary, you are probably well aware of the high volatility in this market. But it is one thing to manage price fluctuations as part of a buy and hold investment. It is quite another thing when it comes to your monthly salary.
Your fixed costs – from your groceries to your rent or mortgage payments – will likely stay in US dollars. If the price of Bitcoin drops by 20%, the real value of your salary will also drop. At the very least, you will need to have a substantial emergency fund to help you in case the crypto prices drop for an extended period.
3. Is it legal?
According to federal law, wages must be paid “in cash or negotiable instruments payable at par”. But there is no clear line as to whether the cryptocurrency counts as “au pair”. Added to which, according to JD Supra, different states have additional rules. For example, some states require wages to be paid in US dollars.
Before agreeing to receive your salary in crypto, make sure everything is clearly spelled out in writing and that your business is in compliance with all state regulations.
4. How will taxes work with crypto wages?
Taxes on cryptocurrencies are complicated. The IRS treats crypto like property and you have to track every transaction. Crypto transactions are taxable events that are subject to capital gains and losses. But social charges must also be taken into account.
If you are considering accepting crypto salaries, it would be a good idea to speak with a professional tax advisor to make sure you and your employer are on the right side of the law.
There are better ways to manage your crypto investments
Crypto payments are fast and secure, and a crypto salary can make sense in one or two specific scenarios. For example, if you work internationally, receive payments in cryptocurrency could reduce transfer costs and speed up payment processing.
But in general, cryptocurrency is not common enough to warrant locking in your salary. It’s still too risky, and too difficult to use for day-to-day expenses.
There are a number of positive indications that cryptocurrencies are here to stay, but we don’t know for sure. It is still a relatively new and untested market. Aside from the above legal and practical considerations, your monthly income is just too much.
A better option? Why not convert a portion of your income into crypto every month after reaching your bank account? Many cryptocurrency exchanges even allow you to automate your crypto purchases, so you can set up an automatic purchase order that will take place shortly after payday.
This way, if there is a drastic change in the market, you can easily suspend that transfer. And since you’re in control, you can make sure you have cash on hand to cover your monthly obligations.
[ad_2]