Russian companies that have been tempted to pay employees in cryptocurrency are likely to be hit with hefty fines, according to labor authorities in Moscow.
Crypto has been gaining traction as a means of remuneration since Russia permitted limited use of cryptocurrencies in cross-border transactions, but regulators are adamant that the ruble remains the only legal tender, including when it comes to wages.
Russia’s labor agency threatens fines for crypto salaries
Russian businesses are not allowed to pay salaries in cryptocurrency, fully or partially, according to Russia’s State Labor Inspectorate. The agency outlined its categorical stance in a response to a request from employers for clarification on the matter, the Russian daily Izvestia unveiled this week.
The inspectorate’s position has been confirmed by the Ministry of Labor, the publication added. According to the country’s Labor Code, salaries can be paid exclusively with money, and cryptocurrency has so far been recognized only as property in Russia, the article explained.
Using digital coins for payroll purposes has become relevant since the Russian government legalized crypto settlements in foreign trade to help companies deal with financial restrictions imposed over Moscow’s invasion of Ukraine.
Since 2024, legal entities have been permitted to make international payments in crypto through state-authorized platforms and strictly within an “experimental legal regime” (ELR). The arrangement has tempted some employers to pay wages this way as well.
Questions regarding the option also arise from the convenience of cross-border crypto transfers that are fast and low-cost. That makes them attractive for Russian firms working with foreign specialists, explained Alexander Khaminsky from the industry organization Business Russia.
However, using anything other than the ruble as a means of payment, outside the ELR, is still against the law in Russia. And no exception has been made so far that would allow salaries to be legally paid in digital assets, noted Maxim Barashev, managing partner at the BBNP law firm.
According to Khaminsky, all this leads to the following conclusion:
“Payments in crypto carry legal risks for the employer.”
At present, fines for such offenses are relatively small, 50,000 rubles at the most (a little over $600). But at the same time, the Russian parliament is now considering a bill that seeks to raise the monetary penalty for illegal payments with crypto to 1 million rubles (almost $13,000).
Russian companies want to pay crypto wages, Moscow says ‘No’
Interest in crypto payments for remuneration, as an alternative to bank wires of fiat, has been growing around the world, not least due to the increasing number of remote jobs. Traditional channels can be slow and costly, slashing up to 6% of the payroll.
In the case of Russia, international sanctions are also a major concern. Euro and dollar transactions may not go through at all, commented Victoria Pavlyushina, partner at the Russian Agency for Economy Transformation and Development.
Introducing cryptocurrencies into the Russian economy is “inevitable,” according to Damir Kudryakov, an expert at the Faculty of Economics of the RUDN University. Companies nowadays are increasingly looking for alternatives to the classic banking tools, he added.
The authorities in Moscow fear, however, that besides undermining Russia’s national currency and its most modern incarnation, the digital ruble, cryptocurrencies like Bitcoin (BTC) can also allow businesses and employees to “optimize” their tax expenses and prevent regulators from tracking financial flows. Pavlyushina pointed out:
“A mass transition to it [crypto] threatens loss of personal income tax and insurance premiums, as well as a decrease in the role of the ruble.”
“We continue to be against using cryptocurrencies in payments inside the country. That is, ‘yes’ for foreign economic activity, ‘yes’ for particularly qualified investors as a target for investments. Nevertheless, we are against their use as a means of payment,” Russia’s central bank Governor Elvira Nabiullina was recently quoted as stating.
Elsewhere, crypto salaries have already become a viable option for employers and employees alike in a number of countries, Izvestia noted in its article, giving the United States, Japan, Switzerland, and Portugal as examples.