A US-based business development specialist has alleged that a company that paid them for contract work using crypto now wants them to return the tokens after a considerable rally in the asset’s price.
Based on a letter sent to Quentin Fottrell of MarketWatch’s “The Moneyist,” the anonymous worker, only known as “Crypto Confused” received payment for the contract work in crypto in August 2021. After the payment was disbursed, the price of the token gained 700%.
The day this employee wrote the letter, the Chief Executive Officer emailed them demanding that they return the digital asset since they did not “generate any revenue for the company and are not currently doing any follow-up work.”
The CEO said that after they return the digital asset, they can invoice the firm for the hours worked in US dollars and not the current value of the crypto. This employee said:
“I am not really sure what to do. I have worked with this person for many years, and he has a tendency to try to change the terms of payment after agreeing on a certain way of operating.”
Fottrell asserted that:
“paying employees in cryptocurrency is a risky practice for both the employer and the employee, asking for payment back, whether from salaried employees or contract workers, would likely open the company up to a lawsuit.”
United States-based employers are needed to report the US dollar value of any crypto used for payment on the date it is sent, due to the volatile nature of most tokens:
“If the value of the cryptocurrency fell 700% since August 2021, would he want to pay you in dollars? If it suddenly dipped by that amount today, would he follow up with his employees?”
While this letter does not specify which token the employer used for payment, Ether (ETH) would fit that bill, having exploded by 790% from $370 on August 1 to surpass $3,300 at the time of writing.
Depending on the total amount of crypto used for payment, Crypto Confused would probably need to pay 20% on the earnings under the current capital gains tax rate in the United States. The Internal Revenue Service (IRS) extended the deadline for filing taxes this year to May 17.
Firms Still Hesitant On Crypto Payments
While some of the firms are adopting crypto as a method of payment for services rendered in the US, there are still some legal issues to sort out. Twitter has mentioned that it will explore paying its over 4,000 employees in Bitcoin (BTC), but it was quick to add that it would probably give them a choice to accept crypto or fiat.
In February 2021, Miami mayor Francis Suarez mentioned a similar initiative for the city employees.
The vice president of marketing at BitPay, Merrick Theobald, told reporters in March that the firm was:
“most definitely seeing greater demand from employees to take at least a portion of their salary in Bitcoin due to the surge in price as well as greater awareness of crypto.”
Nevertheless, a global blockchain leader at Ernst & Young, Paul Brody, said that he believes it was unlikely for more firms to offer to pay their employees in crypto. He called it “a high-risk proposition” due to the volatility of some of the tokens. Is the time right for more institutions to adopt cryptos as a form of payment for services rendered?