Virtual Currency wages

• - Global Reach: Cryptocurrency enables fast, low-cost payments to remote employees worldwide without traditional banking delays.

- Employee Demand: Tech-savvy workers increasingly request partial or full crypto compensation as part of their benefits.

- Decentralized Workforce Models: DAOs and Web3 companies often rely on token-based payment structures tied to governance or performance.

SJKP LLP advises companies on how to implement these systems while maintaining compliance with wage, tax, and securities laws.

Unlike traditional wages, crypto payments fluctuate in value. Employers must ensure that payments meet minimum wage laws in U.S. dollars and that value is properly recorded at the time of payment. Missteps can trigger Department of Labor (DOL) violations and potential employee claims.

Federal and state regulators—including the IRS, FinCEN, and state labor departments—are scrutinizing crypto-based payroll systems for tax evasion, securities misuse, and recordkeeping deficiencies. SJKP LLP helps clients anticipate and address these evolving regulatory challenges.

All wage payments must meet minimum wage requirements in U.S. dollars at the time of payment. If crypto values drop between the time of transfer and conversion, employers risk underpayment violations.

We advise on valuation methods, pay frequency, and recordkeeping procedures to ensure ongoing compliance.

Many states require wages to be paid in lawful U.S. currency or by instruments readily convertible to cash. Crypto payments may be considered “non-cash compensation” unless structured properly.
SJKP LLP assists clients in drafting dual-payment models, combining base fiat wages with crypto bonuses or incentive structures to comply with state statutes.

Independent contractors and full-time employees face different tax and reporting obligations. Our attorneys ensure that crypto payments are structured correctly within benefit plans and do not violate ERISA or deferred compensation rules.

Employers must:

• - Report the fair market value (FMV) of crypto wages in U.S. dollars at the time of payment.

- Withhold and remit income tax, Social Security, and Medicare (FICA) obligations based on FMV.

- Report compensation on Form W-2 or Form 1099 for contractors.

SJKP LLP assists with payroll policy design, tax documentation, and coordination with accounting providers to maintain audit readiness.

Employees receiving crypto wages must report the value as income and later recognize capital gains or losses upon sale or exchange.
We guide clients through tax documentation, cost basis tracking, and compliance with IRS Notice 2014-21 and Form 1099-DA requirements.

Crypto markets operate 24/7, and valuation can vary across exchanges. We advise on using consistent data sources and time-stamped valuation methodologies to ensure accurate, defensible reporting in case of IRS audits.

If a company issues native tokens or pays employees in governance tokens, regulators may classify them as securities under the Howey Test.

SJKP LLP helps companies structure token-based compensation to avoid unregistered securities issues, or where necessary, pursue Regulation D/S exemptions.

Under FinCEN rules, entities processing payroll in digital assets may qualify as money service businesses (MSBs), triggering AML and KYC duties.
We design compliance programs that meet Bank Secrecy Act (BSA) standards while maintaining operational efficiency.

Crypto payroll affects corporate governance and disclosure obligations. We assist companies in maintaining transparent records, board approvals, and internal audit trails that satisfy both SEC and state labor examiners.

Many employers adopt a two-tier structure:

• - Base Salary in Fiat: Ensures compliance with wage laws.

- Bonus or Equity Component in Crypto: Provides incentive alignment and employee flexibility.

This model allows companies to innovate while maintaining wage and tax compliance.

We assist clients in selecting crypto payroll providers and custodial platforms that offer compliant conversion, withholding, and reporting systems.
SJKP LLP reviews vendor contracts to ensure liability protection, data security, and adherence to labor and tax regulations.

Employment agreements must specify valuation dates, conversion rights, and tax responsibilities. We draft and negotiate crypto wage clauses that clearly allocate risk between employer and employee.

We advise multinational clients on FATCA, OECD CRS, and local tax laws governing crypto wages. Our team helps design withholding mechanisms and cross-border reporting systems to avoid double taxation.

Some countries restrict the use of cryptocurrency for payroll. SJKP LLP evaluates jurisdictional risk and provides legal pathways for lawful compensation through compliant intermediaries or localized conversions.

Foreign employees paid in crypto may require updated visa declarations or tax documentation. We ensure immigration and payroll teams remain synchronized to prevent regulatory violations.