New Zealand is pushing the boundaries on digital currency. The sovereign island country in the southwest Pacific Ocean has deemed it legal for employers to pay their employees in crypto-assets, such as Bitcoin (BTC), bringing the controversial currency further into the realm of everyday payment methods. According to Financial Times, it will become the first country to do so.
Along with the explosion of interest in cryptocurrencies, there is a growing need for clarity regarding the legal implications of these new forms of currencies. Governments around the globe and regulatory agencies are working tirelessly to understand the nature of digital assets. With that said, Bitcoin (BTC) and other digital assets just received a vote of confidence in New Zealand.
New zealand allows wages paid in cryptos
The New Zealand’s tax authority made a ruling that allows salaries and wages to be paid in digital currencies, such as Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP), from the 1st of September.
The asset of choice must meet certain criteria
According to a bulletin published by the country’s Inland Revenue Department (IRD) on August 7, the cryptocurrency of choice must be pegged to one or more real-world currencies such as Dollar or Euro. Also, one must be able to convert it directly into a standard form of payment.
In addition, payment in cryptocurrency must be made in service performed under an employment contract, and must be a regular part of the employee’s remuneration.
It’s worth noting the ruling doesn’t apply to self-employed individuals. It applies only to salaried employees.
Although New Zealand’s tax authority does not recognize cryptocurrency as legal tender, they did admit that these assets have many of the same features as real-world currencies.
Wellington’s Inland Revenue defined crypto assets as property, noting that crypto assets are not defined as “money” anywhere, and therefore are not legal tender. However, the authority will tax crypto-assets as money because ‘some crypto-assets have many of the characteristics of money; for example, being…divisible…and hard to counterfeit.”