Key takeaways
- Paying contractors in USDC is usually simple. Paying employees in crypto is not: tax is worked out in local currency, and some countries' wage laws don't allow it.
- In the US, the IRS treats virtual currency wages as wages, with withholding and a Form W-2. In the UK, an employer must account for tax and National Insurance on readily convertible tokens. German law says wages are paid in euros.
- Keep three jobs apart: deciding what someone is owed, withholding and filing tax, and moving the money. Payment accounts do the last one. Payroll providers and employers of record do the second.
- Treat the pay run as a treasury event: fund it from a budget, convert what you need ahead of time, and record each payment's value on the day.
The short answer
Many web3 companies hold money in stablecoins and pay people in several countries, so crypto payroll looks like a natural fit. For contractors, it often is: you pay an invoice in USDC or USDT, send a small test first and keep the records. For employees, the wallet is the easy part. You still owe tax and employment compliance in each country, and those are worked out in local currency.
A workable setup is a mix: employees paid through a local payroll or an employer of record, contractors paid in the form they ask for, and everything funded from one treasury budget. If you only need the contractor side, our guide to paying international contractors covers it step by step.
Employees and contractors follow different rules
The first question is what the person is under local law, and paying in crypto doesn't change the answer.
| Employee | Contractor | |
|---|---|---|
| Who owes tax | You usually withhold and pay employment taxes | The contractor usually pays their own |
| What you need | Local payroll, or an employer of record | A contract and invoices; tax forms where needed |
| Paying in stablecoins | Depends on local wage law, and often only part of net pay | Usually a commercial choice, subject to the contractor's local rules |
| Main risk | Unpaid tax and breach of wage law | Misclassification, and paying the wrong wallet |
Here's how three countries treat employees, as of November 2026:
- United States. IRS Notice 2014-21 says the fair market value of virtual currency paid as wages is subject to federal income tax withholding and reported on Form W-2. Separately, federal wage rules say that, standing alone, the Fair Labor Standards Act requires wages to be paid "in cash or negotiable instrument payable at par". Get advice before paying minimum wage or overtime in anything else. States add their own rules.
- United Kingdom. HMRC says crypto received as employment income is subject to Income Tax and National Insurance on its value. Where it's a readily convertible asset, the employer must account to HMRC for what's due, using its best estimate of the value.
- Germany. The Trade Regulation Act says wages are calculated and paid in euros. Employers and employees can agree non-cash benefits as part of pay, within limits.
These are examples, not a full list. Check each country where you have staff.
Stablecoins, tokens and token grants
Stablecoins are the easy case, because the value on the day is close to the face amount. Native tokens and your own token are harder. In the US, a contractor or employee includes the fair market value in income, measured in dollars on the date of receipt. If the token falls before they sell, they may owe tax on money they never see.
If you pay any part of compensation in your own token, treat it as a separate project. Vesting, lockups, valuation and securities rules all come into play, and specialists such as Toku offer token grant administration. Don't run token grants through a payment file.
Who does what
A pay run has three jobs: deciding what someone is owed, withholding and filing tax, and moving the money. Tools cover different parts, so check which ones you're buying. As of November 2026, these companies describe their services as follows:
| Option | What it says it does | Better fit when |
|---|---|---|
| Toku | Employer of record and global payroll in 100+ countries; pays in local currency or stablecoins; token grant administration and tax documents | You have employees, or token grants, across countries |
| Rise | Employer of record, contractor pay and US payroll, covering 190+ countries; workers can split pay across local currency, stablecoins and crypto | You want one provider for employees and contractors |
| Deel | Global payroll; US employees can opt in to part of net pay in crypto through Coinbase; contractors in eligible countries can withdraw USDC or USDT | You already use Deel for HR and payroll |
| Bitwage | Payroll platform for teams and freelancers; workers can take some or all of their pay in crypto or stablecoins | Workers want crypto, and you want to keep your current payroll |
| Align | Payment account: pay by bank in USD, EUR, GBP or AED, or in USDC or USDT, from your company's balances | You pay contractors and suppliers, or fund payroll, from a stablecoin treasury |
| A multisig on its own | Sends tokens | Rare, one-off payments; you still need your own records and tax process |
Align doesn't calculate tax, file returns or employ anyone. If you have employees in several countries, a payroll provider or employer of record is the better fit for that work.
A worked pay run
These numbers are invented to show the method. A company with a USDC treasury owes this for October:
| Group | How they're paid | Amount |
|---|---|---|
| 6 contractors | USDC to their wallets | $48,000 |
| 3 contractors | Euros by SEPA | $30,000 equivalent |
| 3 employees in the UK | Through a payroll provider, in pounds | $42,000 equivalent, with tax and employer costs |
| Total | $120,000 |
Only $48,000 has to stay in USDC. The other $72,000 becomes bank money, so the finance lead works back from the pay date:
- Five working days before. Approve the pay file and the invoices. Compare new or changed wallet addresses with what was confirmed at onboarding.
- Three working days before. Move 120,000 USDC from the treasury wallet to the operating account, under the approved budget.
- Two working days before. Convert the equivalent of $30,000 to euros and $42,000 to pounds, and check the rate and fee.
- Pay day. Pay the six USDC contractors in one batch, on one network, and the euro contractors by SEPA, and fund the payroll provider ahead of its cut-off.
- Same day. Save the transaction hashes, bank confirmations and the value of each payment on the day.
Leave a buffer for fees and rates, and use the payment arrival calculator so a bank holiday doesn't push pay late.
A checklist for paying from a treasury
- Classify everyone first. Take local advice on employee or contractor status. See misclassification risk.
- Put pay terms in the contract. State the currency of the amount owed, the asset paid, whose rate applies and who bears network fees.
- Keep the amount in fiat. Agreeing $8,000 paid in USDC is simpler to tax and to report than agreeing a number of tokens.
- Confirm wallets outside chat. Take the token, network and address through a form, and confirm by call. A changed address gets the same check. See changed payment details.
- Test every new wallet. Stablecoin transfers can't be reversed, so send a small amount first.
- Check where the money goes. A worker's country decides whether they can receive or use stablecoins, and sanctions rules apply to every payee.
- Separate approval from payment. One person prepares the run, and another approves it.
- Keep records by person. Keep the contract, invoice, tax form, hash or bank reference, and value on the day.
How this works with Align
From your Align balance you can pay your own team and contractors in USD, EUR, GBP or AED from named accounts in your company's name, or send USDC or USDT to their wallets. Align pays the network fee on USDC and USDT sent from an Align balance. Bulk payments pays many recipients from one CSV in USDC or USDT, with every row checked first. Paying many bank accounts at once is available on request. Approvals can require an admin's sign-off above an amount you choose. See also Align for payroll and Align for web3 companies.
Some limits apply. The account is for paying your own people: running payroll for other companies isn't allowed on an Align account, and AlignConnect is built for that. Payments to contractors go through your named virtual account, and Align may ask for the invoice behind any of them. Align opens accounts for registered companies after a KYB review, and crypto and web3 companies are reviewed for licensing. It can't pay people in sanctioned countries. USD ACH and wire access is on request, after a second review by Align's US banking partner, which can decline or set limits. Align isn't a bank. Pricing is by quote: contact us.
This guide is general information, not legal or tax advice.
Sources
- IRS, Notice 2014-21 and Digital assets (November 2026)
- US Code of Federal Regulations, 29 CFR 531.27 (November 2026)
- HMRC, Cryptoassets Manual, CRYPTO21100 (November 2026)
- German Federal Ministry of Justice, Gewerbeordnung, section 107 (November 2026)
- Toku, Homepage (November 2026)
- Rise, Homepage (November 2026)
- Deel, Crypto payroll (November 2026)
- Bitwage, Homepage (November 2026)
- Align docs, 1st party and 3rd party payments and Prohibited activities
Common questions
- Is it legal to pay employees in crypto?
- It depends on the country. In the US, the IRS treats virtual currency wages as wages for tax, but federal wage rules call for cash or a negotiable instrument, so take advice before paying minimum wage or overtime that way. German law says wages are calculated and paid in euros. A safer pattern is to pay in local currency and let staff choose to take part of their net pay in stablecoins.
- What is the difference between crypto payroll and stablecoin payroll?
- Crypto payroll covers pay in any digital asset, including BTC, ETH or a company's own token, whose value can move before someone spends it. Stablecoin payroll means pay in tokens such as USDC or USDT that track a currency. Stablecoins are simpler for a finance team, but tax and employment rules treat both as pay.
- How are USDC payments to contractors reported in the US?
- IRS Notice 2014-21 says payments to an independent contractor in virtual currency are reported at fair market value in US dollars on the date of payment, like other reportable payments for services. Check the current form and threshold each year. A foreign contractor usually gives you a Form W-8BEN or W-8BEN-E instead.
- Is Align a payroll provider?
- No. Align moves the money: it pays your team and contractors by bank transfer in USD, EUR, GBP or AED, or in USDC or USDT. It doesn't calculate pay, withhold tax, file returns or act as an employer. For those, use a payroll provider or an employer of record, and fund it from your Align balance if its terms allow.
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.
