Jeremie Beaudry doesn't code or hang out on Reddit. He wasn't raised post-financial crash with a healthy suspicion of traditional banking institutions or fiat currency. In fact, Beaudry spent most of his career working for a big U.S. bank, but now the financial services legal counsel is taking a small portion of his regular weekly pay in bitcoin. He has been socking it away in what amounts to a self-directed individual bitcoin IRA.
"I generally don't have a firm grasp of computer science and lean on developers for that. If you spoke to me versus the larger crowd in crypto, I am on the outside looking in," said Beaudry, compliance and regulatory affairs counsel at BitPay, who previously worked for SunTrust Bank. "I would say I don't fit the norm, but I've definitely been introduced and baptized in fire in certain ways. I loved my position and co-workers and boss [at SunTrust], but I really wanted to get into fintech," the former bank executive said.
Beaudry started with the Atlanta-based digital currency payment provider a year and a half ago, when the price of bitcoin was between $400 and $500. (It has since moved from near-$20,000 to trading in the $8,000 range in recent days.) It took the financial services lawyer a little time to warm up to the idea of being paid in bitcoin. The payroll app that BitPay uses allows employees to set a bitcoin percentage or dollar amount on a weekly basis.
"It's an easy change within the app," Beaudry said. Employees set their pay preferences on a Monday and get paid on a Friday. That time lag is a default disincentive for any employee trying to time the price of notoriously volatile bitcoin, though Beaudry said BitPay is the first company where he has been paid weekly.
"I don't really care about fluctuations," Beaudry said. "I am from the traditional banking world. I owned a home on my 21st birthday, so I understand that hard assets appreciate over time, too," Beaudry said. "But I think my approach to finance has changed. ... Not being in it is worse than being involved in it. "
Beaudry isn't one of BitPay's more aggressive employees when it comes to the cryptocurrency payroll option. Some of the company's 52 employees, though only a handful, take 100 percent of pay in bitcoin, typically workers in their 20s without a family or mortgage and who believe the blockchain technology is "insanely disruptive," Beaudry said. These workers tend to diversify across multiple cryptocurrencies after being paid in bitcoin.
The majority of BitPay employees take a percentage between 5 percent and 20 percent of pay that they plan to invest for retirement.
"It's a set-it-and-forget-it deal," Beaudry said. "I use it as a savings vehicle. That's what I have been doing ... a little bit more each week." But he added that his situation would be different if he wasn't married and didn't have a wife with a good job and traditional 401(k). He also has 401(k) accounts from previous employers. "There's a cushion there," the 34-year-old said.
Employee-benefit decisions, like the ones taking place at BitPay, are leading workforce experts to consider whether the trend may ultimately expand to the broader work world, especially as more younger workers enter the labor force.
"Workers want to have autonomy in everything they do. That is on the rise across all companies," said Andrew Challenger, vice president at Challenger, Gray & Christmas, the oldest executive outplacement firm in the United States. "It's accessible anywhere. When you just get paid in regular currency, you are getting compensation at the exchange rate of the day — no autonomy. But if it's in a currency outside the system, you could potentially hold on and exchange later."
BitPay employees located in Argentina — infamous for attempts to nationalize pension assets, and a country where inflation has always run high — are among those who use the bitcoin pay option for a substantial portion of pay, Beaudry said.
"Younger individuals are more hesitant to invest life savings with banks, because of what happened in 2008," Beaudry said. "They are young, and they want the ability to be their own bank and have access to money they believe is rightfully theirs. And full control."
At Coinbase — which booked $1 billion in revenue in 2017 amid the surge in the value of bitcoin, which is now valued at $1.6 billion, according to PitchBook — getting paid in bitcoin is not part of the pitch to employment recruits. "It's usually a surprise to new employees," said Nathalie McGrath, director of people at Coinbase. She worked at the Stanford Graduate School of Business managing strategic planning and operations for the MBA Career Management Center before joining Coinbase in 2014.
"We have sessions on benefits and payroll. We go through all of it, and it's included there. It's not something we make a big deal about. It's not something we use as part of the job 'sell,'" McGrath said. "It's a benefit once you're in, and one of those things we have been doing for a long time."
Forty percent of employees at Coinbase have some percentage of pay allocated to bitcoin. It works with a longer lag than the BitPay system — a two-payroll-cycle delay from time of election. Coinbase's payroll provider, ADP — the dominant player in the payroll space — receives the information on the bitcoin elections to make sure taxes are correctly deducted, and direct deposit or check information for the fiat currency portion of pay is correct. The bitcoin price that employees receive is the price at the time bitcoin is converted to their bitcoin wallet address.
Most Coinbase employees think about the bitcoin pay as an investment holding or as a means to purchase other digital currencies for diversification purposes. Coinbase plans to offer employees a way to be paid in additional cryptocurrencies, such as ethereum or litecoin, in the future, which McGrath thinks will result in greater use of the payroll feature.
The Coinbase HR executive said many of its employees have traditional investment strategies in addition to an allocation to cryptos, and the company already offers a 401(k). Coinbase, which is growing quickly — it is at 250 employees today but expects more hires in the coming months — plans to offer 401(k) matching in 2018, a benefit many small companies do not offer.
BitPay also offers a 401(k) program, but the company at this time does not provide a match.
"The employees who are really deeply and passionately into crypto are the ones more likely to choose digital currencies over traditional investments," she said. "Folks less deep in it, but who believe, are more diversified." McGrath added, "I don't feel like I have to do it. I also have funds in a traditional savings account and investments. I'm doing more of a diversified approach."
She thinks the best way to communicate the payroll option is as the "slow, constant every few weeks — not worrying about price fluctuations or trying to beat the system — and knowing if something should happen, I could lose."
"We have younger employees asking for benefits like a 401(k) and matching, so it depends both on where they are in life and how they have been brought up," McGrath said. "Some are more traditional and getting advice from their parents. It's a nice perk, being able to take advantage of something more unique, but we need traditional benefits as well."
There's a basic logic to Coinbase employees diversifying beyond bitcoin. It's the same reason why no employee at any corporation should be over-invested in employer stock: "Equities can be used elsewhere. There's a case to be made for needing more traditional assets when your entire career is in crypto," McGrath said.
One thing Coinbase does for new employees is give them some cryptocurrency to "play with," McGrath said, though the company declined to quantify the amount of bitcoin granted. "They can send to friends and family. They can purchase something through a bitcoin channel or ethereum channel. The expectation, we tell them, is 'you will use it.'"
Playing with bitcoin may be the best training a new employee in the world of bitcoin work can receive.
"Being invested in cryptocurrency makes me a better researcher and educator," BitPay's Beaudry said. "You do have to dive into some of these," he said, but he added, "I also have life insurance."
"Some people here are really hard-coded comp-sci and really into crypto and believe anything outside of crypto as an asset isn't good," Beaudry said. "But I would say, since we've been growing and hiring new staff not introduced into the bitcoin world, they now come on board and are sitting down at lunch and learning about crypto and other things about economic policy, and even newer folks are saying, 'Maybe there is something to it and a certain percentage [of pay] needs to go there.'"
It's common outside of the crypto world to joke about how little anyone really understands it, but efforts at Coinbase show the need for education goes straight to the heart of the crypto craze. Coinbase has a CryptoClub that keeps office hours for employee education on what is occurring in the marker, a weekly coding school covering the technical aspects of the industry and what McGrath called "Coinbase University," a lecture series on the history of money and digital currency topics.
Jonathan Johnson, president of Medici Ventures, a 35-employee cryptocurrency and blockchain start-up investment arm of Overstock.com, said the company holds a small amount of cryptocurrency in an internal fund — not a registered fund. One of the fund's benefits is as an employee-education and engagement tool.
Each month, Medici asks employees to make calls on which tokens should be bought or sold, a process that is the basis for actual fund-buying and -selling decisions. Employees are not ranked or formally evaluated individually, and any annual bonus payment isn't based on their token calls. But at the end of the year, the group is evaluated on the success of its choices and the team does discuss how each employee's token calls performed. "It's the wisdom of the crowd," Johnson said. "If we had just followed their [one employee's] advice, would we have done better or worse?"
Medici also hosts regular bitcoin meetups in its building and encourages employees to attend. The company also has a weekly lunch meeting called MED talk to inform employees about developments in blockchain and new cryptocurrencies. When Medici developers come back from industry conferences, they are expected to share knowledge through a MED Talk or with the team in another setting.
Johnson said one interesting thing the company had hoped would happen through engagement efforts — and it has occurred — is cross pollination between developers. "We have two classes of developers: those really familiar with crypto and into it, and those who are traditional enterprise-grade software developers. We tried to get those two groups interacting enough, so now the crypto folks are doing enterprise-grade projects and the enterprise software developers fluent in crypto, too."
Medici's internal crypto fund was used as the basis for paying employee bonuses last year. "We looked to see how the fund did and we gave a portion back to employees," Johnson said. He was among the six Medici employees who opted to take the bonus in bitcoin. "Initially I thought it would be higher, but the bonus was a pretty good bonus, and as it got higher I expected fewer people would do it."
All Medici employees received the same level of bonuses, as long as they had been with the company for the full year. Employees who had been employed for less than a year received a pro-rated bonus. Johnson said his decision was driven by a view that the bonus money was to save for the long-term in bitcoin. "I am long-term bullish on it; that was an easy decision for me, but the bonus is worth less today than when I got it."
The company did not offer the option to split the bonus between a fiat currency paycheck and bitcoin. "I didn't want to put payroll through too much work. It's a different algo for every employee," Johnson said.
One of Medici's portfolio companies, Barbados-based money transfer start-up Bitt, does offer employees and contractors the ability to be paid in bitcoin. "Our employees are all cryptocurrency enthusiasts to varying degrees," said Rawdon Adams, CEO. "Total compensation is still a mix of local Barbados dollars complemented by BTC (bitcoin). But in some cases, mainly to remote employees in other jurisdictions, we can pay the entire salary in BTC if that person so desires."
McGrath said offering pay in bitcoin is "not the specific perk that gets them in the door," and it's a bigger question for companies outside the crypto space. With any employee benefit, offering a "cool perk" can't be the end goal, she said. "If you think it can be rolled into your offerings in a fun and unique way and you are hoping to get something out of it, like increased employee engagement or a component of employees being more engaged in the crypto community, then think about it."
For companies with less than 100 employees and staff in their 20s asking to be paid in bitcoin, "there's a good-use case to say it's not a huge cost and maybe we should add it to our employee benefits package," Beaudry said. "You can diversify a 401(k)-like match by taking a dollar amount and putting it into crypto to broaden their diversification and introduce a new asset class."
The BitPay lawyer, whose job is to speak to regulators "nearly every day," is convinced they will not "overregulate it to death," but he added that if there's going to be more demand for digital currency payroll options, it's likely to be employees rather than management at traditional companies driving it. "If you are looking at a CFO or chief HR officer, they are not likely to introduce something employees don't ask for."
Ultimately there may be cost savings opportunities for corporate treasury operations — Challenger pointed to an emerging opportunity for multinational firms to lower payroll costs globally, and Johnson said transferring cryptocurrencies should be exponentially cheaper than the existing system of banks and middlemen like ADP.
Payroll processing is big business: ADP generates a fee per paycheck for its processing, with 20 percent of its business international, according to Colin Plunkett, Morningstar analyst. The part of ADP that includes payroll can contribute as much as 75 percent of ADP's revenue and operating income — workers' comp and 401(k) services, which reside in the same business line, also contribute, Plunkett said. In the most recent quarter, $2.3 billion of a total $3 billion in revenue, or roughly 66 percent, came from ADP's employer services division.
There are payroll companies that have started up in recent years to specifically offer employers a way to pay workers in digital currency. But right now it's more about employees asking for the option than corporate treasurers trying to save money, McGrath said.
Challenger noted that the U.S. dollar has a pretty incredible history of holding value over time. The vast majority, even millennials, still prefer USD to bitcoin, he said. Total physical cash in circulation grew by 7.4 percent in 2017 to $1.57 trillion, according to the Federal Reserve, and cash in circulation was at $233 billion last year, also up from the previous year.
"It's not an enormously attractive employee benefit right now, even in the tech sector, but it's something companies should at least have on their radar," Challenger said. "Since we're starting to see it as part of compensation already, it doesn't seem so far-fetched."
"People ask, 'What will it take for crypto to become more mainstream?' One common answer I give is, 'People getting paid in it,'" Johnson said.
Johnson said he does not currently use his own crypto holdings to buy things, just like he doesn't cash in a tech stock he owns to buy pizza. "I spend dollars. I think when more people are paid in crypto, they may save some, but they will still need to live day-to-day life, and that's when use becomes more widespread. I also think the price fluctuations will be not as great. When it's not driven by emotions — greed and fear — when it becomes more of a currency we transact in."
Story updated to reflect that BitPay offers a 401(k), though it does not currently offer a company 401(k) matching contribution.