Want to receive your paycheck in crypto? Until now, that option has been available only to a relative handful of people such as celebrity athletes or employees at cryptocurrency companies. But soon that’s about to change.
On Monday, Coinbase announced “Get paid in crypto,” a new service that will let nearly anyone in the U.S. who gets paid by direct deposit receive all or part of their wages in Bitcoin, Ethereum or various other cryptocurrencies.
Coinbase is billing the service as the “future of payroll” and, in a blog post explains how exactly this will work:
“You can set up direct deposit in just a few steps without leaving the Coinbase app. Find your current payroll company or employer and we’ll automatically update your paycheck allocation. If you’d prefer to set up direct deposit manually, we’ll provide instructions on what to share with your HR department or employer payroll website.”
The blog post also noted that those who sign up for direct deposit can receive their wages into their Coinbase account in either dollars or crypto. Both options are free—there is no service fee—though Coinbase will earn a small profit in the form of a spread for those who choose to be paid directly in crypto.
The new direct deposit option is a significant development for the crypto industry since Coinbase has tens of millions of U.S. customers. If even a small percentage of them sign up, it could increase the overall demand for Bitcoin and other digital assets.
Coinbase’s direct deposit offering follows a nascent push by 401k providers to let employees put crypto in their retirement accounts, reflecting how crypto is becoming increasingly mainstream in the broader American workforce.
For Coinbase, the direct deposit feature, which will go live in the next few weeks, is part of a larger initiative to push into conventional banking by means of its Coinbase Card debit card service.
First announced last year, the Coinbase Card is connected to the Visa network and lets users shop just as they would anywhere else, though with the difference that the purchase is funded by cryptocurrency. The value of such crypto debit cards is debatable, however, given that crypto purchases trigger tax headaches and, in the case of the Coinbase Card, come with a 2.75% transaction fee.
Coinbase has acknowledged this friction, though, and offered a reward system that pays 1% in Bitcoin on every purchase and up to 4% back in some other cryptocurrencies. Crucially, the debit card also lets users pay with no fee and receive rewards if they use the stablecoin USDC—an arrangement that offers an economic advantage and likely avoids the tax headache.
The new direct deposit is also likely to prove appealing to some customers given that it offers a way to sidestep Coinbase’s transaction fees on crypto purchases.
There is currently a waitlist for the Coinbase Card, which recently integrated Apple Pay, but a company spokesperson says numerous customers have already received one and are using them “in the wild.” She added that anyone who signs up for direct deposit will automatically be eligible for the card.
More broadly, Coinbase’s new direct deposit offering comes at a time when a wide variety of financial upstarts are challenging traditional banks for their business. Those include not only crypto companies, but fintech companies like PayPal, Venmo, Square and SoFi—which have been rapidly integrating crypto features themselves.