Is It Legal for Web3 Companies to Pay Salaries in Cryptocurrency?

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The rise of Web3 has introduced new ways of working, hiring, and compensating talent across borders. As decentralized teams become the norm, many Web3 companies have turned to cryptocurrency as a practical and innovative method for paying employees. But while the idea seems perfectly aligned with the ethos of decentralization and global accessibility, the legal landscape is far from uniform.

Can a company legally pay salaries in crypto? The answer depends entirely on jurisdiction. From Dubai’s progressive rulings to China’s outright ban, regulatory attitudes vary widely—and understanding these differences is critical for any Web3 business operating internationally.

Let’s explore how key regions are responding to this emerging trend.

Dubai: Judicial Recognition of Crypto Wages

In a landmark move during August 2024, Dubai made headlines by affirming the legitimacy of cryptocurrency as employee compensation through Case No. 1739/2024. In this ruling, a Dubai court ordered an employer to pay wages in cryptocurrency—specifically, the amount stipulated in tokens—rather than converting it into fiat currency.

This decision marks a significant shift. Unlike a similar 2023 case where courts rejected crypto wage claims due to lack of clear valuation methods, the 2024 judgment emphasizes that if a contract explicitly defines part of the salary in digital assets, it must be honored as agreed.

👉 Discover how global Web3 teams can structure compliant payroll systems today.

For Web3 companies based in or expanding to Dubai, this precedent offers strong legal protection—provided they:

Dubai’s stance reinforces its position as a forward-thinking hub for blockchain innovation and sends a powerful signal: crypto-based compensation is not just possible—it’s enforceable.

Singapore: Regulatory Clarity with Tax Compliance

Singapore has long been known for its balanced and transparent regulatory framework. When it comes to paying salaries in cryptocurrency, the Inland Revenue Authority of Singapore (IRAS) has provided clear guidance.

According to the latest Digital Token Income Tax Guidelines, paying employees in cryptocurrency is treated as a non-cash benefit. Employers must:

While there's no explicit ban, compliance is non-negotiable. The IRAS requires full documentation of each transaction to ensure audit readiness. This approach allows Web3 firms flexibility while ensuring tax integrity.

Singapore’s model demonstrates that crypto wages can coexist with robust fiscal oversight—making it an attractive base for compliant, globally distributed teams.

United States: State-by-State Divergence

The U.S. presents a fragmented picture. There is no federal law permitting or banning cryptocurrency salaries, leaving individual states to set their own rules.

A notable development came in early 2025 when Oklahoma Senator Dusty Deevers introduced the Bitcoin Freedom Act (SB325), which would allow employees to voluntarily receive wages in bitcoin. The bill upholds free-market principles by emphasizing consent—neither employers nor employees can be forced into crypto payments.

Other Republican-led states like Texas and Wyoming have also explored similar legislation, reflecting broader ideological support for financial innovation.

However, public sentiment lags behind policy experimentation. A University of Pennsylvania study found that while 41% of Republicans own crypto (compared to 32% of Democrats), only 7% of Americans overall would accept their entire salary in digital currency.

For Web3 employers in the U.S., the path forward remains cautious. Even where legally permissible, adoption faces cultural and logistical hurdles—especially regarding tax reporting, volatility concerns, and banking integration.

European Union: Indirect Frameworks and National Variations

The EU’s Markets in Crypto-Assets (MiCA) regulation provides a comprehensive framework for crypto issuance and services—but it does not directly address employee compensation.

Instead, member states interpret existing labor and tax laws independently:

These differing approaches highlight the complexity of pan-European payroll strategies. Web3 companies must tailor their compensation plans to each country’s fiscal rules—even within the same economic bloc.

Hong Kong: Cautious but Open to Incentives

Hong Kong has embraced virtual assets in trading and investment, but remains conservative when it comes to wage payments.

Under the Employment Ordinance, wages must be paid in legal tender—Hong Kong dollars. Since cryptocurrencies are not recognized as legal currency, direct salary payments in digital assets are not permitted.

That said, companies can offer crypto as bonuses or performance incentives, provided employees agree voluntarily. This workaround allows Web3 firms to attract talent without violating labor laws.

There’s another practical issue: banks often don’t recognize crypto income when assessing loan or mortgage applications. Even if an employee declares their crypto earnings for tax purposes, financial institutions may disregard them as unstable or unverifiable.

👉 Learn how top Web3 teams manage cross-border compensation legally and efficiently.

Thus, the recommended approach in Hong Kong is:

Mainland China: Strict Prohibition

China maintains one of the strictest stances globally. Cryptocurrencies are classified as illegal financial instruments, and their use in commercial transactions—including salary payments—is prohibited.

A 2024 case at the Qianhai People's Court in Shenzhen reinforced this position. An employee sued his employer for unpaid token-based compensation, arguing it was part of his agreed salary package. The court dismissed the claim, ruling that agreements involving crypto wages are void because they violate national financial regulations.

This precedent underscores two key points:

  1. Employers risk legal exposure by offering salaries in crypto.
  2. Employees have no legal recourse if such payments are withheld.

For Web3 businesses operating in mainland China, the message is clear: all compensation must be processed in RMB via approved channels. Any use of digital assets for payroll purposes exposes both parties to regulatory penalties and contract invalidation.

👉 See how compliant Web3 firms navigate international payroll challenges seamlessly.

Frequently Asked Questions (FAQ)

Q: Can I legally pay my remote team in cryptocurrency?
A: It depends on your team members’ locations. Some jurisdictions like Dubai and Singapore allow it under specific conditions, while others like China prohibit it entirely. Always consult local labor and tax laws before implementing crypto payroll.

Q: Are crypto salaries taxable?
A: Yes. In most countries, receiving cryptocurrency as income is a taxable event based on its fair market value at the time of receipt. Employers are typically responsible for withholding and reporting taxes.

Q: What should be included in an employment contract for crypto payments?
A: Contracts should specify the type of token, quantity, valuation method (e.g., exchange rate source), payment schedule, and tax responsibilities. Clarity reduces disputes and supports legal enforceability.

Q: Can employees refuse to be paid in crypto?
A: In most legal systems, yes—especially where crypto isn’t recognized as legal tender. Payment must generally be made in official currency unless both parties agree otherwise under compliant frameworks.

Q: Is paying in company-issued tokens risky?
A: Yes. If tokens lack liquidity or market value, courts may view them as non-compliant or symbolic rather than actual compensation. Transparency and valuation are essential.

Q: How can Web3 companies stay compliant globally?
A: Use fiat for base salaries and offer crypto as optional bonuses or equity-like incentives. Maintain detailed records, follow local tax guidelines, and seek legal counsel in each jurisdiction.

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