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Overview
After over a decade in existence, we’ve seen a dramatic increase in the popularity and adoption of cryptocurrencies. Many companies now accept payment in cryptocurrency and a growing number of municipalities around the world recognize cryptocurrency as legal tender and have started to launch their own cryptocurrencies.
As a result of cryptocurrencies becoming ubiquitous, there is a growing interest among employees to integrate cryptocurrency into their compensation and 401(k) retirement plans. While providing employees with the option to receive wages or invest in cryptocurrency through their 401(k) is an exciting development in the benefits space, there are legal issues employers should consider. These issues include examining how the volatility of cryptocurrency could impact an employer’s compliance with wage and hour laws as well as assessing the Department of Labor’s recent guidance expressing concerns with adding cryptocurrencies as an election option to a 401(k) plan.
Shawn Butte, in-house employment counsel at Wish will provide an overview of the legal issues governing (1) paying wages or bonuses to employees in cryptocurrency, and (2) adding cryptocurrency as an election option in a 401(k) plan:
- Cryptocurrency definitions [5 minutes]
- Bitcoin, Ethereum, and stablecoins
- Cryptocurrency transaction basics
- Recent trends involving the adoption and regulation of cryptocurrency [5 minutes]
- Adoption by municipalities worldwide
- SEC plans to regulate cryptocurrency
- Issues to consider before allowing employees to receive compensation in cryptocurrency [20 minutes]
- Benefits to employers with allowing employees to receive wages in cryptocurrency
- Legal risks to consider when paying employees in cryptocurrency
- How the volatility of cryptocurrency may impact employers and employees
- Federal and state wage and hour law implications
- Impact on classification of employees as exempt or non-exempt
- Issues to consider when paying employees bonuses in cryptocurrency
- Issues to consider before adding cryptocurrency as an option to an employer sponsored 401(k) plan [25 minutes]
- 401(k) basics:
- Requirements for 401(k) plans under the Economic Retirement Income Security Act (“ERISA”)
- Responsibilities of plan fiduciaries under ERISA
- Role of the Department of Labor in enforcing ERISA
- Takeaways from Department of Labor Compliance Assistance Release No. 2022-01 (“DOL Release”)
- Concerns expressed by the DOL with adding cryptocurrency as an option to 401(k) plans
- Potential exposure of liability to plan fiduciaries
- Conclusions [5 minutes]
Program Level: Overview
Intended Audience: Attorneys in private practice and in-house counsel
Prerequisites: An interest or need to understand the legal issues surrounding (1) paying wages or bonuses to employees in cryptocurrency, and (2) adding cryptocurrency as an election option in a 401(k) plan.
Advanced Preparation: None