For the past 5 years or so I pay moderators, community managers, designers, marketers, and many other personnel in crypto. Usually stablecoins. I've also deployed vesting agreements for closer personnel. Software developers have basically always accepted crypto for services over the last decade, or ones that do have been easy to find.
I've accepted capital in crypto for non-crypto hedge/PE funds, more and more fund administrators are very well adept in taking in-kind investments for subscriptions of new limited partners.
Its more like having cell phone service in an underground subway station. When its not there you debate about it, when its there you just use it.
One aspect that may be overlooked which is a high volume use case, is that international wires are being circumvented at unlimited amounts, converted to domestic wire transfers. The unlimited amounts aspect is something that Wise/Revolut/Paypal/Western Union cannot compete with in either capability, company policy,
company interpretation of compliance, actual regulatory compliance, speed, or fees. For example, in the payment for services use case, instead of an international wire transfer taking multiple business days and being error prone by user error along with multiple banks and a random compliance officer, the recipient (me, or them) just does a domestic wire transfer if they want fiat currency, after the payment was received in crypto. The bank just has a locally KYC'd person receiving domestic funds from the same person's KYC'd account at the domestic crypto exchange, which has the capability of being a same-day transfers within the local monetary union. Its just a matter of convenience. The international wire system (SWIFT) is not an authority to defer to, if their circumvention makes you feel like something bad is happening. They're just there, and antiquated, and inconvenient. Despite what you may have heard about how amazing the Eurozone's SEPA system is, turns out that not that many people actually send between nations, where the reality is that instant or even same-day SEPA is heavily dependent upon the two banks involved, the two countries, and more. Infinite, unreliable, permutations. With crypto, people receive it all very fast, and they can decide what they want to do with it. Since they can also acquire goods and services and invest with crypto often times they don't want fiat money. Whether they do or don't, they all also have the choice of stable value, or merely a few minutes of exposure to volatile value. This reality amongst people that actually use it has simply trumped all conjecture.
For US employees 5 years ago we built a price oracle to automatically withhold vested sums from the smart contract, and consider other conditions like if the employee did an 83(b) election and would not be subject to income tax upon vesting.
Everyone else paid in crypto were contractors. Just normal tax deductions on our end, based on value sent at time of transaction.
It follows the same rules as uncategorized property:
USD value at time of receipt for income taxes, USD value at time of disposition and the delta for capital taxes.
The nature of the transaction’s purpose determines where/how it is accounted for. Just like with usd its up to you to determine if a transaction was a deductible expense, capital gains/loss, charitable contribution, a non-tax event like an in-kind investment, bond/credit/borrowing, income, vesting… its not different enough to really be having this conversation to be honest, but I’ve heard it all over the past decade so fire away.
I just make notes of the usd value transferred at the time, to simplify things when filing taxes. But the block explorers often show usd dollar values at time of transaction and time now so its easy to have a record to look at as well.
Some exchanges are beginning to attempt doing this for people, making tax forms like stock brokerages make tax forms, but they all assume people are buying and selling crypto on their platform instead of earning it directly off platform. Swing and a miss there, but lets check back in 5 years.
This finally seems like a legitimate use of crypto, thanks for the patience. What’s the main benefit for your case of using crypto over wiring fiat currencies?
I/We have large inventory of crypto balances more frequently than fiat.
So I think you have to switch your frame of reference here. I’m not doing cumbersome things to get crypto and then send it to someone. I do cumbersome things to get and send fiat where having permission to transfer it is even a factor.
Fiat users are pretty interesting in that they typically have never been in a circumstance to accept a large payment or a volume of payments. Even though when I use fiat I am able to send to only the banked population within a banking walled garden, most of them dont even know how to accept payment. “Wire?ABA?Ach?IBAN?SWIFT? Why is my Zelle/Venmo/Paypal frozen the one time I did something important to me?” Native crypto users are exempted from this. Even brokerage accounts for stock investing are walled gardens.
Per institution, per account type, there are varying degrees of online wire transfer convenience, many times with an unclear daily or monthly wire limit. As people can acquire goods, services, and invest with their crypto, many people just choose that path available to them and don’t swap back to fiat. If they are also paid in fiat then they use that to pay for the things that require payment in fiat, but people are willing to build balances in this parallel borderless ecosystem as well.
I've accepted capital in crypto for non-crypto hedge/PE funds, more and more fund administrators are very well adept in taking in-kind investments for subscriptions of new limited partners.
Its more like having cell phone service in an underground subway station. When its not there you debate about it, when its there you just use it.
One aspect that may be overlooked which is a high volume use case, is that international wires are being circumvented at unlimited amounts, converted to domestic wire transfers. The unlimited amounts aspect is something that Wise/Revolut/Paypal/Western Union cannot compete with in either capability, company policy, company interpretation of compliance, actual regulatory compliance, speed, or fees. For example, in the payment for services use case, instead of an international wire transfer taking multiple business days and being error prone by user error along with multiple banks and a random compliance officer, the recipient (me, or them) just does a domestic wire transfer if they want fiat currency, after the payment was received in crypto. The bank just has a locally KYC'd person receiving domestic funds from the same person's KYC'd account at the domestic crypto exchange, which has the capability of being a same-day transfers within the local monetary union. Its just a matter of convenience. The international wire system (SWIFT) is not an authority to defer to, if their circumvention makes you feel like something bad is happening. They're just there, and antiquated, and inconvenient. Despite what you may have heard about how amazing the Eurozone's SEPA system is, turns out that not that many people actually send between nations, where the reality is that instant or even same-day SEPA is heavily dependent upon the two banks involved, the two countries, and more. Infinite, unreliable, permutations. With crypto, people receive it all very fast, and they can decide what they want to do with it. Since they can also acquire goods and services and invest with crypto often times they don't want fiat money. Whether they do or don't, they all also have the choice of stable value, or merely a few minutes of exposure to volatile value. This reality amongst people that actually use it has simply trumped all conjecture.