How to pay international contractors in USDC or by local bank transfer
Pay each contractor the way they can use the money at the lowest cost: usually a local transfer in their own currency, or USDC or USDT to a wallet when they ask for it. Keep the contract, invoices and tax forms, and verify payout details with a test before the first payment.
By Pavel Skalin, Founder & CEO, Align · Reviewed by the Align compliance team
Updated · 6 min read
The short answer
Pay each contractor in the form they can use at the lowest cost. If a contractor has a bank account in a major currency, that's usually a local transfer in their currency: SEPA for euros, Faster Payments for sterling, ACH for dollars in the US. For contractors who ask for USDC or USDT, send it to a wallet on the network they name, after a test payment. Either way, keep the contract, the invoices and any tax forms for every payment.
Stablecoins or a local bank transfer
Stablecoin payouts are an established option. Deel, an employer of record platform, pays more than 10,000 freelancers in more than 100 countries in stablecoins through BVNK, according to Artemis's October 2025 report. They make sense when the contractor asks for them and can convert or spend them where they live.
A local bank transfer is the better fit when the contractor wants money in their own currency, in their own bank, with nothing to convert.
| Local bank transfer | USDC or USDT to a wallet | |
|---|---|---|
| What you need | Legal name, account number or IBAN, bank code | Wallet address, network, token |
| Speed | SEPA Instant under 10 seconds; Faster Payments in real time; SWIFT credited to the end customer within an hour for 43% of payments (Swift, October 2024) | Seconds to about 20 minutes until final, depending on the network |
| Contractor's costs | Possible intermediary fees on SWIFT, depending on the charge code; their bank's rate if it converts | Their exchange's spread and withdrawal fees to reach a local bank |
| Local rules | Standard banking rules | Vary by country; some restrict stablecoin settlement |
On SEPA Instant, the European Payments Council says funds are available in under 10 seconds, 24 hours a day, every day of the year. Faster Payments also runs around the clock, with a scheme limit of £1 million. For network speeds, see which network to use for USDT and USDC payments.
Records to keep
- The contract. Scope, deliverables, rates, invoice currency, payment method, and who pays transfer and conversion fees.
- Invoices. One per payment, from the contractor, matching what you paid.
- Tax forms. A US payer will usually collect Form W-8BEN from a foreign individual, or Form W-8BEN-E from a foreign company. The IRS instructions say "Do not send Form W-8BEN to the IRS": the contractor gives it to you. It generally stays valid until the last day of the third calendar year after signing, and the contractor must send a new one within 30 days if their information becomes incorrect. Contractors who are US persons are a separate case with different forms.
- Proof of payment. The bank confirmation, or the transaction hash, network and token for a stablecoin payment.
- Payout details history. When and how the contractor gave you each bank account or wallet, and how you verified it.
Where the work is done matters for US tax. The IRS says "the place, where the personal services are performed, generally determines the source of the personal service income," regardless of where the contract was made or where the payer is. Confirm your own position with a tax adviser; this is general information.
Setting up payouts
- Collect details through a channel you control, such as an onboarding form, not only by email. Confirm them on a call with the contractor.
- For wallets, collect the token, network and full address. Check that you can send on that network. On networks with native USDC and bridged USDC.e, agree which one.
- Send a test, and wait for the contractor to confirm it arrived before sending the full amount. Copy the address for the main payment from the same verified record.
- For bank transfers, match the legal name to the account. Pay in the contractor's own currency where you can, so their bank doesn't convert it at its own rate.
- Re-verify any change of details with a new call and a new test. Treat an emailed request to change payout details as unverified until you've confirmed it by phone.
If a payment does go to the wrong wallet or network, see what to do if you send USDT or USDC to the wrong network.
FX and timing
Agree the invoice currency in the contract. If you invoice in dollars and the contractor lives in euros, someone takes the exchange risk between invoice and payment, and the contract should say who.
With a stablecoin payout, the contractor converts locally, so their costs and timing depend on their exchange and their country's rules. Brazil is a recent example. Its central bank's Resolution BCB 561 of 30 April 2026, in force since 1 October 2026, requires eFX providers, which offer regulated international payment services, to settle with their foreign counterparties through a foreign exchange operation or a non-resident's real account, and bars the use of virtual assets, such as stablecoins, for that leg.
With a SWIFT payment, most of the delay is at the receiving end. Swift's October 2024 data showed 90% of payments reaching the beneficiary bank within an hour, but only 43% reaching the end customer that fast. Swift named possible causes at the beneficiary bank: batch processing, market infrastructure opening hours, regulatory requirements and local practices such as confirming with the customer that a payment is expected. Pay a few days before month end if contractors expect funds on a set date, and use the charge code OUR if they need the full amount.
Misclassification risk
Paying in USDC doesn't change whether someone is a contractor or an employee. The label in the contract doesn't settle it either.
In the US, the IRS looks at behavioral control, financial control and the type of relationship, and says there is "no 'magic' or set number of factors." A business that treats an employee as a contractor without a reasonable basis may owe the employment taxes for that worker. Either side can ask the IRS to decide using Form SS-8, which the IRS says can take at least six months.
In the UK, the off-payroll working rules (IR35) put the status decision on the client in most cases, unless the client is a small business outside the public sector. HMRC offers its CEST tool to help.
Other countries have their own tests. If a contractor works full time for you, on your schedule, with your equipment, take local advice; an employer of record or a local entity may be the right structure.
How this works with Align
From your Align balance, you can pay contractors in USD, EUR, GBP or AED from named accounts in your company's name, over ACH, Fedwire and SWIFT for dollars, SEPA and SEPA Instant for euros, Faster Payments for sterling, and IPP and UAEFTS for dirhams. US ACH and wire access is switched on at your request, after a second review by Align's US banking partner, which can decline or set limits. Or you can send USDC or USDT to contractors' wallets. Payments to third parties such as contractors go through your named virtual account, and Align may ask for the invoice behind a payment. Align doesn't onboard companies based in the UAE; AED accounts are for companies outside the UAE. See Align for payroll. Pricing is quoted on request: contact us.
Sources
- IRS, About Form W-8BEN (reviewed October 2026) and Instructions for Form W-8BEN (October 2021)
- IRS, Source of income: personal service income (reviewed February 2026)
- IRS, Independent contractor or employee? (reviewed May 2026)
- IRS, Digital assets (reviewed September 2026)
- HMRC, Understanding off-payroll working (IR35) (updated February 2026)
- Artemis, Stablecoin payments from the ground up (October 2025)
- Banco Central do Brasil, Resolução BCB nº 561 (30 April 2026); Spark, Brazil's ban on stablecoins in cross-border eFX settlement (July 2026)
- European Payments Council, SEPA Instant Credit Transfer
- Pay.UK, Faster Payment System
- Swift, Data shows focus needed on beneficiary leg (17 October 2024)
- Base docs, Transaction finality; Ethereum.org, Single slot finality
- Tether, Terms of service (updated 26 February 2026); Circle, USDC terms (updated 15 October 2026)
- Align docs, 1st party and 3rd party payments
Common questions
- Do I need a W-8BEN from a foreign contractor?
- If you're a US payer, usually yes. Form W-8BEN lets a foreign individual certify their foreign status to the payer; a foreign company uses Form W-8BEN-E instead. The contractor gives it to you, not to the IRS, and it generally stays valid until the end of the third calendar year after they sign it.
- Is it legal to pay contractors in USDC?
- Often, but it depends on the contractor's country, which decides what they can receive and how. Brazil, for example, has barred its eFX providers from using virtual assets, such as stablecoins, to settle with their foreign counterparties since 1 October 2026. Check local rules for each country you pay into, and document every payment.
- Does paying in USDC change the contractor's tax position?
- Not the basic obligation. In the US, the IRS treats digital assets as property and says income from them is taxable; a US contractor reports digital asset payments on Schedule C, as with other self-employment income. Contractors elsewhere follow their own country's rules, and should keep a record of the value on the day they're paid.
- What happens if I pay the wrong wallet?
- Stablecoin transfers can't be reversed by you or the issuer, so the money is usually lost unless the owner of that address sends it back. That's why the first payment to any new wallet should be a small test that the contractor confirms.
This guide is general information, not legal, tax or financial advice. Rules and providers' terms change; check the sources linked above and take advice on your own situation.
Related guides
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