From Fiat to Crypto: Why the Future of Payroll Is Borderless

The future of payroll using stablecoins and crypto is on its way. Employees around the world are beginning to demand to be paid in the way they want to get paid.  Are HR leaders ready? Here's a look at the real facts and the future trajectory of payments that won’t come from a government issued currency such as the U.S. Dollar, Euro or Yen but instead through a  “non-fiat” payment method.

Pantera Capital reports that the percentage of professionals receiving crypto-based salaries tripled from 3% in 2023 to over 9% in 2024. This growth is expected to continue as more businesses and employees recognize the benefits of being paid in a medium that is correlated differently than their home country currency.

Stablecoins like USDC and USDT are dominating the “non-fiat” payroll market due to their price stability compared to more volatile cryptocurrencies. USDC, in particular, is emerging as the preferred choice because it is closely pegged to the U.S. dollar.

While full crypto salaries are not yet common, hybrid payroll - where employees split their compensation between fiat and crypto - is gaining traction.  A significant portion of Millennials and Gen Z workers are open to or prefer receiving part of their salary in crypto. 

What are the driving factors?

• Cost Efficiency: Stablecoins can significantly reduce transaction fees associated with international payments.

• Speed: Stablecoin transactions settle much faster than traditional bank transfers, often within minutes.

• Transparency: Blockchain technology provides a clear and immutable audit trail for transactions.

• Hedging against volatility: Stablecoins can mitigate some of the risks of currency fluctuation, particularly for international workers in high inflationary or unstable countries.

• Financial inclusion: Stablecoins can be accessed without a bank account, promoting financial inclusion in underserved regions.

Who are the first adopters in this new frontier of payroll?

• Web3 businesses are particularly drawn to stablecoins and other crypto payroll techniques due to their native digital operations, crypto treasuries and international teams.

• Startups: Stablecoin salaries help startups attract top talent and streamline international payments. Tech workers, in particular, are more open to and interested in alternative payments methods and investments.

• International teams: Stablecoins simplify cross-border payroll, reducing complexities and costs. 

Where do we go from here?

• Crypto expansion beyond payroll: Stablecoin use cases are expected to extend beyond salaries to include benefits, bonuses, and expense reimbursement.

• Wallet integration: The success of stablecoin payroll calls for seamless integration of Web3 payments with existing payroll systems and the further adoption of crypto wallets for banking.

• Regulatory changes: While the U.S. is showing increasing openness to stablecoin regulation with the GENIUS Act providing a legal framework, the global regulatory landscape for paying in crypto remains uneven. Businesses need to monitor and comply with evolving regulations across each jurisdiction they operate in, and may also need to press for change in order to serve their employees. For companies using Employer-of-Record (EOR) services to employ internationally, they should expect the expert EOR team to advise them on how they can and can’t use crypto to pay in each locality.

• Limiting risk:  Companies will want to consider possible liabilities in offering pay in alternative ways and whether they should limit the amount of non-fiat pay that an employee can receive to limit the risk of crypto fluctuations.

• Providing education: Simplifying the user experience and educating employees on digital wallets and blockchain tools will be crucial for widespread adoption.  If a company moves to a crypto-forward payroll, some employees will need to come up to speed on the technology and how it fits into their personal profile.

• System upgrades:  Traditional HRIS and Payroll vendors will need to evolve and upgrade their systems to be truly ready for employees to receive compensation and benefits in crypto.

• Overcoming privacy concerns: The transparency of public blockchains could lead to salary visibility - potentially impacting employee morale - and will require solutions that balance transparency with privacy considerations.

• Evolution of traditional finance and treasury: Stablecoins are expected to become increasingly integrated with traditional financial services, including automated tax reporting, benefits management, and seamless currency conversion, but it may take some time. In addition, companies will need to decide if they philosophically agree with having crypto in Treasury and determine their risk appetite for this new corporate asset.

The future of payroll in stablecoins and crypto is real and coming soon.  The advent of crypto payroll has the potential to transform numerous global employment practices. While there may be some challenges in regulation and privacy, the benefits of efficiency, cost savings, and financial inclusion position stablecoins and crypto as a cornerstone of the evolving future of work. 

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Carol MacKinlay is the Chief Human Resources Officer at Velocity Global, where she leads the company’s people strategy and supports its continued global expansion. With more than 30 years of experience as a people leader, board member, and advisor, she has built, scaled, and led HR functions across organizations at every stage of growth, from startups to publicly traded companies.