Bitcoin payroll provider Bitwage has begun offering employees a way of receiving wages paid in cryptocurrency, but without the volatility.
Announced Wednesday, company clients can now sign up to the Bitwage platform in order to pay their workers using the USD Coin (USDC) stablecoin, which is linked to the price of the U.S. dollar. Salaried workers or freelancers can also sign up to receive wages from employers in the coin.
The move comes at a time when global markets have been in turmoil resulting from the ongoing uncertainty relating to the recovery from coronavirus-affected communities, and many national currencies have lost value against the dollar.
USDC is a fiat-collateralized stablecoin that was launched in October 2018 by the CENTRE consortium, comprising of a partnership between P2P payments fintech firm Circle and U.S.-based crypto exchange Coinbase. The consortium was formed to develop price-stable crypto assets and network protocols.
The stablecoin is issued as an ERC-20 standard token on the Ethereum blockchain and is backed by corresponding USD held in accounts, subject to regular public reporting of reserves.
The ability to pay employees in cryptocurrency isn’t new as Bitwage has been engaged in crypto-related wage activity since at least 2014. In addition to bitcoin (BTC) and bitcoin cash (BCH), it started offering payments in ether (ETH) last June. Employees and freelancers are able to choose a percentage distribution of their payments in crypto or fiat.
Using stablecoins for payments is a relatively recent but fast-growing trend. They remove the risk to earners’ salaries from the volatile movements of cryptocurrencies like bitcoin and ether, meaning workers won’t risk having lost a percentage by the time the funds have arrived and been exchanged.
The fiat-backed tokens are, according to Bitwage, becoming more popular in South America, where inflation has severely impacted the value of government backed fiat currency in some nations.
The Venezuelan bolivar, for example, has depreciated significantly since June of last year and is down by more than 3000% against the dollar, opening up the potential for USD-backed stablecoins to provide more stability for communities.
“During our testing, we have seen a lot of interest in the Latin American communities around stablecoin wages. We are excited to see how this will improve the lives of communities with struggling financial systems around the world,” Jonathan Chester, Bitwage CEO, said.
Bitwage is headquartered in San Francisco, with payroll service operations in the U.S., Europe, Latin America and Asia. Bitwage recently launched a company-sponsored bitcoin 401k with Leading Retirement Solutions, Gemini and Kingdom Trust.