Think Twice Before Agreeing to Cryptocurrency Salary Payments

Neil Dennis

As an increasing number of employees choose to receive portions of their salary in cryptocurrency, a risky strategy given the volatility of the digital asset classes.

Companies that deal in cryptoassets are prominent among those offering such payment options to their employees, a scenario the Financial Times has compared to the practice of payment in company scrip.

Outlawed in Britain by the Truck Act in 1887, scrip was issued by companies as tokenized payments that could often only be spent as rent on company-owned houses and for food and goods in company-owned stores. Such form of payment would permanently shackle their employees to the company and ensure that all salaries would be spent back with the company.

Given the Choice

Indeed, it would be a good comparison if modern companies were forcing their employees to accept part payment in cryptocurrency. 

In the UK, the 1887 Act was superseded by the Employment Rights Act of 1996, which allows employees to choose how they would like to be remunerated. 

Crypto-enthusiasts and those willing to take on extra risk appear to be accepting such offers and this has prompted tax authorities around the world - including New Zealand last week - to respond in order to ensure tax loopholes are not exploited.

It remains an obligation upon employers, however, that any form of payment other than 'coin of the realm' is purely optional. 

38% of Crypto Exchanges Interact With High-Risk Entities in 25% or More of Their Transactions

Leading cryptoasset data provider CryptoCompare has published an updated version of its cryptocurrency Exchange Benchmark. The report details that 38% of crypto exchanges interact with high-risk entities in 25% or more of their transactions.

According to CryptoCompare’s Exchange Benchmark, interactions with high-risk entities are considered when the cryptoasset data provider is raking exchanges. These interactions are measured according to CipherTrace’s Interaction Risk Score, which profiles transactional risk by “deanonymizing risky entities and illicit activities to identify criminal sources of funds and money laundering exposure.”

CryptoCompare then scores exchanges according to the percentage of transactions conducted with entities deemed high-risk. These include criminals, darknet markets and vendors, gambling projects, malware operators, cryptocurrency mixers, ransomware operators, and OFAC sanctions addresses.

The benchmark details that addresses with up to 25% of transactions conducted with these entities receive some points, but those above said mark receive none. Notably, 38% of cryptoasset exchanges were above it.

Data shared in the report detailed that Top-Tier cryptoasset exchanges, those graded AA to B in the report, interact less with these entities, while Lower-Tier exchanges, those rated C-E, interacted more. While both AA-related exchanges, Coinbase and Gemini, had no interactions with high-risk entities, some of the exchanges with A, BB, and B ratings did.

As CryptoGlobe reported, the Exchange Benchmark also revealed Top-Tier exchanges are gaining market share against Lower-Tier exchanges. It details that top-tier exchanges accounted for 32% of the global volumes in Q4 2019, while in the first quarter of this year they accounted for 36%.

In the second quarter of 2020, the Top-Tier exchanges already accounted for 40% of the global trading volume. In June these exchanges got to a 46% market share. Lower-Tier Exchanges, have seen their share of the space’s total trading volume drop from 68% to 60% in the last three quarters.

Featured image via Pixabay.