As cryptocurrency is gaining popularity, an increasing number of employers are starting to consider paying salaries to their employees in cryptocurrency. Although salary payment in cryptocurrency may attract tech-savvy talents, there are legal implications which employers should consider before implementing such remuneration schemes.

Pioneers who pay wages in cryptocurrency

To date, corporations in Hong Kong have yet to pay its employees, wholly or partially, in cryptocurrency. However, large corporations worldwide have started remuneration schemes in cryptocurrency as early as 2013. The Danish company SC5 was one of the first companies in the world to pay their employees in Bitcoin. Other pioneers in paying salaries in Bitcoin include the Japanese internet leader GMO Group and the German company Digitalmagazin t3n.

Key legal issues

Regulatory privacy and independence

In November 2018, the Securities and Futures Commission (“SFC”) has made a statement that it does not treat cryptocurrency as a virtual currency but a virtual commodity. This suggests that cryptocurrency is not completely regulated by any financial regulatory authorities in Hong Kong, including the Hong Kong Monetary Authority and the SFC. In this connection, employers may enjoy greater privacy and independence from any regulatory authorities’ oversight when paying their employees in cryptocurrency.

Treatment as a virtual commodity

Under the Employment Ordinance (Cap.57), unless otherwise specified, “wages” means all remuneration, earnings, allowances (including travelling allowances, attendance allowances, commission, overtime pay), tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done, subject to certain exclusions. Although cryptocurrency is capable of being expressed in terms of money, it is not per se treated as currency under Hong Kong law. Therefore, it remains unclear whether the Labour Department or the Hong Kong courts will treat cryptocurrency as “wages” under the Employment Ordinance.

Compliance with minimum wage requirements

Cryptocurrency is extremely volatile. Such fluctuations may make it difficult for employers to comply with the Minimum Wage Ordinance (Cap.608) if they choose to pay wages in cryptocurrency. For instance, an employee may be set to receive an amount of Bitcoin that meets or exceeds the minimum wage requirements but the price of Bitcoin fell when the employee actually receives his payroll. Even if cryptocurrency is treated as “wages” under Hong Kong law, if the exchange rate of cryptocurrency to fiat currency fell to a point which would convert to an amount which fails to meet minimum wage requirements, employers may incur potential legal liability.

Tax treatment

Hong Kong is famous for its low tax regime. Unlike countries such as the United States, there is no value-added tax or capital gains tax in Hong Kong, which makes Hong Kong an attractive venue for making payments in cryptocurrency.

In March 2020, the Inland Revenue Department (“IRD”) issued the revised Departmental Interpretation and Practice Notes No. 39 (“DIPN 39”) covering digital economy, electronic commerce and digital assets. In particular, the IRD is of the view that remuneration in cryptocurrency received by employees are subject to income tax in Hong Kong. The same salaries tax treatment applies to income from employment paid in cryptocurrency. Both employers and employees have reporting obligations to declare the amount of income received in cryptocurrency. The amount to be reported as the employee’s employment income should be the market value of the cryptocurrency at the time of accrual, i.e. on the day the remuneration in cryptocurrency is paid to the employee.

Although DIPNs are not legally binding on taxpayers, DIPN 39 shed some light on the interpretation and assessment of cryptocurrencies by the IRD. Since DIPN 39 provides brief and preliminary guidance on the tax treatment of income earned in cryptocurrency, it is yet to be seen details of how the IRD allows employers and employees to valuate cryptocurrencies when declaring tax.

Possible options to pay salaries in cryptocurrency

In light of the above legal issues, employers who are interested in paying salaries to employees in cryptocurrency rather than traditional currency may consider other tools such as partial remuneration payment in cryptocurrency and bonus schemes.

Option 1: Combination of payment in traditional currency and cryptocurrency

The first option is to pay employees a basic rate in traditional currency like Hong Kong Dollars which satisfies minimum wage requirements and supplement the basic rate with cryptocurrency.

Option 2: Employee bonus schemes paid in cryptocurrencies

The second option is to award employees with cryptocurrency in bonus schemes. This would avoid potential non-compliance with the Employment Ordinance and the Minimum Wage Ordinance arising from the volatility of cryptocurrency.

Option 3: Immediate conversion to cryptocurrency after salary payment

Another alternative is to pay employees in traditional currency and then convert to cryptocurrency immediately. This may be done through engaging a cryptocurrency exchange agent.

To ensure legal compliance, employers should keep an eye on the regulatory and legal developments in relation to cryptocurrency and seek legal advice on compliance with Hong Kong law, including regular review of the risks and contractual terms of remuneration payments in cryptocurrency.

Chinese pilot scheme of e-RMB

Earlier this year, the Ministry of Commerce of the People’s Republic of China launched a pilot scheme for digital currency (e-RMB) in major cities including Shenzhen, Suzhou, Chengdu and Beijing in preparation for the 2022 Beijing Winter Olympics. Notably, some civil servants in those cities have started to receive part of their salaries in the form of e-RMB.

The top-down push of e-RMB by the Chinese government may help promote salary payments in digital currency and further penetrate the already extensive use of mobile payment services in Mainland China. At first sight, e-RMB may seem similar to cryptocurrency. However, e-RMB remains an official digital currency which is recognised as money and is managed on a unified platform, as opposed to cryptocurrency like Bitcoin which is based on decentralised storage and distribution.


There is yet to be a clear and comprehensive legal framework relating to cryptocurrency in Hong Kong. However, on the flipside, there is potential for employers in Hong Kong to pay employees in cryptocurrency. For instance, multi-national corporations may be able to attract foreign talents by employing them under their Hong Kong branches without relocation. Since income earned in Hong Kong is subject to Hong Kong tax laws, employers and foreign employees may benefit from the low tax regime in Hong Kong. Foreign employees may also find it attractive as they can transfer wealth across borders more easily.  

On the other hand, given the implementation of the Chinese pilot scheme of e-RMB, it is anticipated that the currency and securities regulations will be amended by the Hong Kong government to facilitate future use of e-RMB in Hong Kong. As the law relating to cryptocurrency develops, it may not be a long way before salary payments in cryptocurrency becomes the norm in Hong Kong.