New Zealand leads the way for cryptocurrency...

New Zealand is officially the first country to make it officially legal for companies to pay their staff in in cryptocurrency.

The Inland Revenue Department published rules approving salaries and wages paid in cryptocurrency, starting from September 1st. A caveat is that the preferred digital coin must be pegged to at least one standard, or fiat, currency. This means that the crypto-asset must function like a currency so employers cannot pay workers in illiquid or otherwise small-time alternative currencies.

Why would anyone want to be paid in cryptocurrency?

The benefits of being paid in cryptocurrency can be useful if you don’t like in a country that accepts the currency you get paid in. In some cases, it can also help circumnavigate expensive cross-border payment expenses.

Cryptocurrencies can fluctuate wildly in price, so employees could see their wages either sky rocket or disappear shortly after being paid if they do not cash out immediately. Getting paid in crypto could bring benefits but certainly isn’t for the faint-hearted.

What is the rest of the world doing?

In the UK, there is no law preventing companies from paying workers in bitcoin, although the law isn’t explicit. British cryptocurrency exchange CoinCorner now offers to pay its staff in cryptocurrency including Bitcoin and Ethereum. All employees have reportedly opted to allocate a portion of their salary to bitcoin, with one employee taking home their full paypacket in bitcoin each month.

Facebook’s blockchain chief David Marcus told a Senate committee that he would take his entire salary in Libra, Facebook’s own digital currency if and when it is approved by regulators. Libra plans to be pegged to a basket of currencies, so would meet the definition of a stable cyptocurrency ion the eyes of the New Zealand authorities.

However, Marcus may be disappointed by the restrictions in the Fair Labor Standard Act which requires that minimum-wage and overtime payments must be maid in US dollars meaning that it would be difficult for him to be paid entirely in cryptocurrency .

Why has New Zealand made this move?

This could be a move by the New Zealand government to make it easier to tax cryptocurrency, meaning more tax dollars for the authorities.

The UK and USA might consider making a similar move as both countries are attempting to crack down on tax owed by people making money from crypto.

Crypto enthusiasts in the US have been waiting nearly five years for the IRS to update its guidance on the treatment of crypto transactions. Although, this has not stopped them trying to tax cryptocurrency. It was reported yesterday that the IRS is sending another round of letters to known cryptocurrency traders advising them that they have filed their taxes incorrectly.

Similarly, in the UK, HMRC is asking crytocurrencybuying and selling platforms to reveal how much users are making. Although you don’t have to pay tax when you buy bitcoin or other cryptocurrencies in the UK, you may have to pay capital gains or income tax when you sell it.