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OP-ED: As Crypto Enters the Startup World, Startups Should Walk Before Running

  • Cryptocurrency has been gaining a foothold in employers’ compensation and retirement benefits
  • Businesses should be mindful of limits on crypto compensation placed by federal, state, and local wage laws
  • An op-ed piece from a Connecticut law firm

This op-ed was developed by Carmody Torrance Sandak & Hennessey LLP, a Connecticut law firm. Reprinted with permission.

The use of cryptocurrency is starting to gain a substantial foothold in employment and compensation according to the U.S. Department of Labor. For startup companies and other employers, this trend should call for both excitement and caution.

First, last month the DOL’s Employee Benefits Security Administration published a compliance assistance document which acknowledged that in recent months firms have been marketing cryptocurrency investments to 401(k) plans as potential investment options. In its compliance assistance, the DOL reminded employers of their core fiduciary duties under the Employee Retirement Income Security Act (ERISA) to offer only responsible investment options to plan participants. As “highly speculative” investments with recordkeeping challenges, among other concerns, the DOL warned employers to exercise extreme caution in offering cryptocurrency investment options to their 401(k) plan participants.

Around the same time last month, the Biden Administration issued an executive order directing the federal government to take a variety of detailed steps to ensure the responsible development of digital assets in the United States, including research and development efforts into the potential deployment of a United States central bank digital currency (CBDC) similar to those being developed by other foreign governments. In issuing this order, the Administration recognized the increasing significance of cryptocurrency in the U.S. and global economies, noting that in November 2021, non-state issued digital assets had reached a combined market capitalization of $3 trillion.

With this quickly developing backdrop, several high-profile individuals, including the mayors of New York City and Miami, and a number of professional athletes, have announced in recent months that they had arranged to either accept or convert their salaries into Bitcoin and other cryptocurrencies. These developments have excited many entrepreneurs and entrepreneurial-minded employees.

In light of this trend, startup companies and other relatively cash-strapped employers may be tempted to offer present or future wages to employees or consultants in digital assets. Some employers are already doing so with the assistance of like-minded service providers, like Bitwage. However, such businesses should be mindful of federal, state and local wage and hour laws that generally do not recognize cryptocurrency at this point for purposes of minimum wage and overtime pay.

Employers that already meet legal pay requirements for their employees in U.S. dollars, but may be interested in integrating cryptocurrency into incentive or bonus plans (such as with stock option plans), may soon be inundated with a world of opportunities to evolve their compensation structures. But as laws and regulations begin to catch up with capital markets and the private sector, startups and other employers are well-advised to walk, before they run, in this complex and fast-developing area.


This summary provides high-level, general information and is not intended to provide legal advice or to address every situation relating to the subject matter. Should further analysis or explanation of the subject matter be required, please contact the lawyer with whom you normally consult. The invitation to contact is not a solicitation for legal work under the laws of any jurisdiction in which Carmody lawyers are not authorized to practice. 

For more information, please contact Tim Klimpl at 203-252-2683 or

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