Getting paid in Bitcoin or any crypto for that matter requires setting up a free account on cryptocurrency exchanges.
CEO and Co-Founder, Defy
Bhagaban Behera is an entrepreneur and currently the founder of Defy, and previously he was the founder of Walrus, Monk.AI and NoiseStreet. Behera is a garudate of IIT Kharagpur.
It’s 2022 and the world has gotten a lot smaller. Teams are global today, and people are choosing to work from anywhere in the world. As for the creator economy, freelancers are taking up projects from different continents, and because of the ease of transactions are looking at cryptocurrency as a form of payment.
Now, the big question is, should you be drawing your salary in the form of crypto? Bitcoin has grown extremely popular over the past few years with countries like El Salvador adopting them as legal tender. This has pushed many companies and individuals towards using cryptocurrencies as alternatives to traditional money as it is free from large fees and regulations, complex taxation, and so on. However, if you are planning to look at crypto as an alternative to traditional money as your paycheck, here are some important things you’ll need to evaluate.
Crypto as legal tender
India received some clarity on cryptocurrency this year, when the government clarified that it might have value but will not be legal tender (just like commodities such as gold and diamonds that have value of their own, but are not legal tender).
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Apart from El Salvador, which in September last year adopted Bitcoin as legal tender, no other country has officially made crypto a legal tender.
India is working on legislation to regulate cryptocurrencies but a public draft hasn’t been released yet.
Meanwhile, the RBI has planned to launch the “Digital Rupee”- a central bank-backed digital currency, which will start circulating in the next fiscal year to usher in a cheaper & more efficient currency management system.
Bitcoin in India and the government
Unlike the traditional currency created by the central bank, the Indian rupee gets its value from the guarantee of the government banking system, Bitcoins have no intrinsic worth and are valued only by the market forces of supply and demand. Thus making the value of a cryptocurrency like Bitcoin vary in volatility.
What will it take to draw your salaries in crypto?
Getting paid in Bitcoin or any crypto for that matter requires setting up a free account on cryptocurrency exchanges. Recipients of crypto payments can then store their bitcoins in digital wallets. They can sell their tokens on the crypto exchange legal tender.
Sometimes the volatility of Bitcoin is seen as a potential benefit to the receiver as it could grow in the future. But it’s not a rosy picture. The volatility may be the main drawback to accepting Bitcoin for payment.
A business or individual could lose a substantial portion of their payment in days or even hours if the value of the currency suddenly drops. Each country also taxes Bitcoin in widely different ways.
The taxation issue
After 1st April 2022, the Indian government has decided to levy a tax of 30% on the income from digital assets, including Cryptocurrency.
The crypto market in India grew 641 per cent in the year through June 2021, according to an October report by industry research firm Chainalysis, but instead of regulating it through fair means, the government levied a tax of 30%, making the twitter hashtags #reducecryptotax & #IndiaWantsCrypto trend on the social media platform.
As the country keeps pace with the global move towards virtual financial instruments, the Budget has also announced the India’s central bank will launch ‘digital rupee’ in the next fiscal year.
What comes next?
The speed and freedom that Bitcoin transactions offer to make it appealing to people doing business internationally. However, the cryptocurrency’s volatility and shifting regulatory environment mean it is much riskier to accept it compared to legal tender currencies. Despite the risks, several international celebrities have shown Bitcoin as their preferred mode of payment. Global icons like Snoop Dogg, Kanye West, Sia, & Mariah Carey have already asked the organizers to be paid in Bitcoin while several others follow the lead, which shows a global acceptance for the digital currency. The only thing to look forward to while we await more clarity and acceptance from the Government of India is how this impacts our daily life, and a future where your monthly salary would be in your crypto wallet, not your bank accounts.
(The author is CEO and Co-founder of Defy.)
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