News reports confirm that New Zealand will now legally permit salaries to be paid in cryptocurrencies. This will initially only affect a relatively small number of people directly. After all, the country only has a workforce of around 2.2 million. Evidently, not everyone will be paid in digital money and not straight away.
However, this could prove to be an important step in the move toward mainstream adoption of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). Could it be the start of millions more people in other countries getting paid this way?
What Has Changed?
This new way of paying salaries to workers will come into force on September 1, according to reports. In this way, New Zealand will become the first country to allow wages to be paid using digital currencies.
There have been some isolated cases of companies paying by Bitcoin in the past. For example, Japanese internet service provider GMO Internet Group previously advised that it was offering employees the chance to receive part of their salaries in Bitcoin.
South Korean authorities have also confirmed use of the blockchain to reward citizens for using public services. However, this is the first time that a nation’s authorities have specifically authorised salary payments in cryptocurrencies.
In order to do this, the employer needs to follow some guidelines, though. For a start, the currency used needs to be pegged to a fiat currency and it also has to be directly transferrable into fiat too. So, it can’t be locked up for a certain time before being accessible.
It has also been pointed out that the firms that choose to pay in this way will still deduct income tax. This will happen through New Zealand’s pay as you earn scheme.
The Future of Digital Money Salaries
The amount of change caused by this move will really depend on how many companies decide to embrace the use of digital money for paying salaries. If some of New Zealand’s biggest employers make the switch it could be a major breakthrough.
It is almost certain that more people are going to start using cryptocurrencies in this way. Even if they transfer to fiat almost immediately, this will nonetheless increase demand levels. More importantly, it will allow newcomers to feel comfortable about using digital money.
Of course, if more countries follow suit, the effect will be increased. Governments elsewhere will be watching with a great deal of interest, keeping a close eye on how this new law actually works. It is easy to imagine a huge surge in demand from other countries if the payment of digital salaries enjoys popularity in New Zealand. One can only imagine the future of crypto currencies if workers all over the world were to get paid in Bitcoin or some other digital money.