Employment and pensions

Is there a role for cryptoassets in the future of employee remuneration in the UK?

Published on 23rd Feb 2023

As regulators contend with cryptoassets, their role as a form of remuneration may develop – though there are considerable legal, tax and practical issues for employers to overcome

Numbers on digital screen

A recent amendment to the revised Financial Services and Markets Bill could have a significant impact on the regulation of cryptoassets in the UK. If passed into law, this amendment may represent a change in approach to the regulation of cryptoassets in the UK and potentially accelerate the timetable for it. 

In February 2023, the UK government launched a consultation on a new and wider regulatory regime for cryptoassets as part of its plan "to make the UK a global cryptoasset hub" and, on 22 February, the House of Commons Library published a research briefing for MPs on cryptocurrencies, which considers the perceived benefits and challenges and policy responses to date.

While it is unclear what the impact of extended regulation of cryptoassets would be, it is likely to increase consumer and investor confidence in those assets and provide some level of stability, thus encouraging renewed growth in the industry. It may also lead to renewed interest in whether there is a role for cryptoassets in the future of employee remuneration. 

There are already a number of high-profile examples of individuals receiving a portion of their employment income in this form. Although this concept is still in its early stages, there are some legal, tax and practical considerations to think about in this area.

What are cryptoassets?

For the purposes of UK anti-money laundering rules, a cryptoasset is defined as "a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically".

Cryptoassets can broadly be categorised as follows:

  • Exchange tokens that have a range of applications, including as a means of payment, investment or inflation hedge. An obvious example is Bitcoin.
  • Stablecoins are a form of exchange token where the issuer seeks to stabilise the volatility of their value by "pegging" the value of the token to a fiat (or real world) currency (such as USD or GBP), a valuable commodity (such as gold) or a basket of assets. Some central banks are considering issuing a stablecoin (and a few have already done so).
  • Utility tokens grant holders access to current or prospective products or services, similar to a voucher. For example, professional sports teams may issue utility tokens to facilitate fan engagement by offering unique experiences and content.
  • Security tokens have the characteristics typical of traditional securities (for example a tokenised share in a company that carries voting rights and the right to a share in future profits of the underlying business).

Exchange tokens and stablecoins are most likely to be used as a way of remunerating employees in place of fiat currency.

Legal considerations

All UK employees must be provided with a statement of terms setting out the scale or rate of their remuneration. It would be necessary to decide how to express this if all or a portion of an employee's remuneration is cryptoassets. If the salary payable to the employee is expressed in fiat currency but paid in cryptoassets, this should lead to more stable remuneration, although it would reduce the potential gains for the employee if there was a surge in value of the cryptoassets against the fiat currency.

One of the key features of cryptoassets is their price volatility and this trend continued throughout 2022, partly due to some significant market shocks in the crypto space including the collapse of the FTX exchange. With such extreme price volatility, there is the risk that an employee receiving a salary expressed in cryptoassets could receive less than the national minimum wage. This is most likely to be an issue for lower-paid employees and/or where the amount payable to the employee is expressed in cryptoassets (rather than fiat currency) and there is a significant drop in price. In this context, employers should remain mindful of their health and safety obligations to employees when considering whether cryptoassets should form part of their remuneration model.

Another consideration is whether cryptoassets can be used for holiday pay and sick pay. This seems difficult to imagine and is not currently considered by the underlying employment legal framework.

Finally, making payments to employees in cryptoassets could affect the validity of an employer's gender pay gap report, given the price volatility and statistics indicating that men are more likely than women to hold cryptoassets.

Tax implications

The tax treatment of cryptoassets is dependent on the nature and use of the token and not the definition. Although HMRC does not consider cryptoassets to be currency or money, cryptoassets received as employment income counts as "money's worth" if such income is considered to be a "readily convertible asset". 

Exchange tokens are generally considered to be readily convertible assets and it is likely that most stablecoins will be treated the same. Consequently, an employer must deduct income tax and national insurance contributions (NICs) through PAYE based on the value of the tokens paid. 

In the event that an employee is paid solely in cryptoassets and there is no cash to cover the tax and NICs due, the employer would pay the tax and NICs on the employee's behalf and the employee would have to reimburse within 90 days of the end of the relevant tax year.

There may be tax consequences for the employee in respect of holding and disposing of cryptoassets, including any capital gains tax liability and self-assessment obligations. 


Putting aside the legal and tax considerations, there is the question of exactly how employers can pay employees in cryptoassets. 

There are an increasing number of companies offering cryptoassets payroll services to businesses. For example, Deel has integrated with exchange platform Coinbase so that employees in the US can choose to have their pay converted from US dollars to cryptoassets with no transaction fees. Another provider, Multiplier, enables crypto payments for freelancers. Such services are fairly limited in the UK currently.

Potential benefits

There are a number of possible benefits for both employers and employees of exploring cryptoassets as a method of remuneration. 

Transfers of cryptoassets can be more efficient and cost-effective than transfers of cash and there is generally no need for an intermediary financial institution. Against a backdrop of high inflation, some consider cryptoassets to offer a hedge against inflation over the medium to longer term. When the values of cryptoassets are rising, there is of course the potential for employees to make significant gains compared to the fiat currency valuation of their salary. 

Crypto curiosity has been running high and a report published by HMRC in 2022 estimated that 10% of the UK adult population hold or have held a cryptoasset. Consequently, employers may need to adapt their remuneration models in order to attract and retain talent. At the start of 2022, Crypto.com predicted that there will be one billion owners of cryptoassets worldwide by the end of the year. Even with the significant fluctuations in value and disruptive events of 2022, Crypto.com found that the number of global crypto holders increased by 39 per cent during 2022, with growth continuing right to the end of the year. 

Possible downsides

There remain significant concerns with cryptoassets including price volatility, uncertainty over the nature of future regulation worldwide and potential security risks with the underlying blockchain. 

There is also the question of whether incorporating cryptoassets in an employer's remuneration model fits with their ESG strategy given a number of cryptoassets – Bitcoin in particular – produce high levels of carbon emissions. 

These are not only barriers to cryptoassets being widely adopted as a way of remunerating employees but also to cryptoassets being adopted for other purposes, including as a means of purchasing goods and services. 

Osborne Clarke comment

As it stands, remuneration in cryptoassets is limited to only the most crypto-aware employers or those who have an interest in promoting a particular cryptoasset. Even for individuals interested or involved in cryptoassets, the vast majority will receive employment income as normal and spend that money as they wish, including investing a portion into cryptoassets. 

It is difficult to anticipate the level of demand among employees for remuneration to be paid in cryptoassets. At the start of 2022, the results of a survey of 2,000 crypto owners living in the UK and US revealed that 55% of participants would prefer to receive their salary in cryptoassets (increasing to 60% among 18-24 year olds). Interestingly, it found that the main reason for not waiting to receive employment income in cryptoassets was that their application as a payment method was not broad enough and this is consistent with the fact most individual holders of cryptoassets (in particular exchange tokens) will use them as an investment to trade and not as cash to spend. According to statistics set out in the House of Commons Library research briefing, the average volume of Bitcoin transactions in the year to 30 June 2022 varied between 200,000 and 280,000 per day, whereas Visa alone was processing an average of 700 million transactions per day.

Whether the results of a similar survey would be the same now is debatable: it may not be surprising to see a reduction in demand given the turbulence of the crypto market throughout 2022 and the high cost of living worldwide. It would also be interesting to see the outcome of a wider survey, given this one only covered a small group of participants with an existing interest in cryptoassets.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Connect with one of our experts

Interested in hearing more from Osborne Clarke?

3 Upcoming Events