What’s the easiest way to get bitcoins into your wallet? Answer: Get paid in bitcoin. BitPay, the world’s largest digital currency payment processor, now lets employees do that with the beta release of itsBitcoin Payroll API for employers.
“For the longest time the hard question was ‘How do I buy bitcoin?’” said Tony Gallippi, co-founder and CEO of BitPay.
“Now the answer is easy: ‘Ask your employer.’”
American W-2 employees (see below) can elect to have all, or part, of their salary paid in bitcoin for every pay period. It works as a ‘net payroll deduction’, meaning taxes and garnishes are removed from an employee’s gross income first, and the bitcoin portion is deducted from take-home pay.
What about the IRS?
This system works better for employees worried about how they might be affected by tax issues.
“Since all payroll and withholding taxes are taken out first from the employee’s gross income, bitcoins can be sent from the net pay tax-free, and the employer’s gross income reporting to the IRS remains unchanged,” said Bryan Kohn, BitPay’s CFO.
For now, the beta release is open to employers in Georgia or South Carolina, and other licensed payroll providers nationwide in the US.
In case you were wondering, yes, all 20 BitPay staff receive at least a portion of their salaries in bitcoin. Four of them, including CEO Tony Gallippi, receive 100% of their net pay in bitcoin.
It was after receiving requests from its own employees that BitPay decided to develop the API for others to use as well. The company has already used the system itself for over six months, and discovered workers at other companies were interested too.
“We had enough requests to make the effort of creating the API worthwhile,” said Stephanie Wargo, BitPay’s VP of Marketing.
20,000 bitcoin merchants
BitPay is still the most popular bitcoin payment processor in the world, removing price volatility risk for curious-but-nervous merchants by converting their bitcoin income instantly into local currencies. Adding new merchants at a rate of 1,000 per week, the company also announced it now had over 20,000 bitcoin accepting businesses as clients. It is also the headline sponsor of the North American Bitcoin Conference in Miami, Florida, from 24th-26th January.
In the US, a W-2 employee is a regular employee or contractor through an agency. W-2 employees have income tax, social security and medicare withheld, while employers must pay 50% of those and have workmen’s compensation coverage. They are also eligible for unemployment compensation.