Cryptocurrency Signing Bonuses and Salary Cap Ramifications

[Phinsesq]

4 minutes ago, incognito_man said:

I don't get the question...

They can collect payment in whatever format the player and team agree upon as far as anyone should care. It skips the step of them paying him in USD and then him going on the market and buying Bitcoin himself. It seems like it's an annoying step he'd force the team to take to set up their accounting to accommodate him. I don't even know why he would that vs. just buying it himself right after he gets it (beyond it being a publicity stunt, I suppose).

There are zero cap ramifications from this, however.

I agree, I don't see any issue with the salary cap, the contract was valued in US currency when the contract was signed. Payment in the form of Bitcoin valued at so much versus the USD, would be no different than agreeing to accept Gold, British pounds, Russian rubles etc and locking in the exchange rate at the contract's signing.  

[Apparition]

18 minutes ago, Phinsesq said:

I agree, I don't see any issue with the salary cap, the contract was valued in US currency when the contract was signed. Payment in the form of Bitcoin valued at so much versus the USD, would be no different than agreeing to accept Gold, British pounds, Russian rubles etc and locking in the exchange rate at the contract's signing.  

I can only guess that there's some tax ramifications where if they accept payment in dollars, it's subject to state and federal taxes at the point when game checks are issued, whereas crypto isn't taxable in that manner? If that's the case then it's clever in the short-term, but they'd still have to declare that income when they cash out, and as I said, crypto is pretty volatile historically. 

Edited April 26, 2021 by Starless

[Phinsesq]

5 minutes ago, Starless said:

I can only guess that there's some tax ramifications where if they accept payment in dollars, it's subject to state and federal taxes at the point when game checks are issued, whereas crypto isn't taxable in that manner? 

I think he would still be subject to the income tax liability when the cryptocurrency is received since it is a gain in assets provided by an outside source in exchange for services, and of course taxed again when it is sold (Capital Gains). 

[Apparition]

2 minutes ago, Phinsesq said:

I think he would still be subject to the income tax liability when the cryptocurrency is received since it is a gain in assets provided by an outside source in exchange for services, and of course taxed again when it is sold (Capital Gains). 

Yeah, that's why I said it's only clever if you're only thinking in the immediate term. Guys like Okung aren't great at thinking beyond that. 

[Tk3]

This is bizarre and a non-issue, in the sense that this is an easily transactable currency

It would be like wanting to get paid in AAPL stock or in JPY Yen. Just receive your money in USD, then convert it into whatever you want

 

Or is this a situation where they lock in the "units" of compensation at the time of the contract, but then gets paid out at a later date, meaning they are on the hook for a different amount? If that's the case, simple hedging should be the answer.

But regardless, just receive your money and then convert it into whatever investment vehicle you prefer. Assuming there isn't any lag in payment it should be a net zero at market value

[kingseanjohn]

I’m just going to assume that people don’t understand cryptocurrency

[offbyone]

Is there any difference between doing this and getting paid in dollars and then just buying crypto?  I think not.

That is like me saying I got paid my salary, went to the casino, put it all on black and won so therefore my salary was twice what it was.  

[incognito_man]

13 hours ago, kingseanjohn said:

I’m just going to assume that people don’t understand cryptocurrency

you probably don't either lol

very few people really understand it

[HolmesPriest]

12 hours ago, offbyone said:

Is there any difference between doing this and getting paid in dollars and then just buying crypto?  I think not.

That is like me saying I got paid my salary, went to the casino, put it all on black and won so therefore my salary was twice what it was.  

Shoulda put it on 18 red like Peyton Manning said, coulda won a lot more.

[Mastercheddaar]

22 hours ago, incognito_man said:

I don't get the question...

They can collect payment in whatever format the player and team agree upon as far as anyone should care. It skips the step of them paying him in USD and then him going on the market and buying Bitcoin himself. It seems like it's an annoying step he'd force the team to take to set up their accounting to accommodate him. I don't even know why he would that vs. just buying it himself right after he gets it (beyond it being a publicity stunt, I suppose).

There are zero cap ramifications from this, however.

It's pretty much one of those stupid "Look at me everybody!!!" stunts young athletes do. OR they are being paid by bitcoin to promote their crypto. 

MC

[blkwdw13]

22 hours ago, incognito_man said:

I don't get the question...

They can collect payment in whatever format the player and team agree upon as far as anyone should care. It skips the step of them paying him in USD and then him going on the market and buying Bitcoin himself. It seems like it's an annoying step he'd force the team to take to set up their accounting to accommodate him. I don't even know why he would that vs. just buying it himself right after he gets it (beyond it being a publicity stunt, I suppose).

There are zero cap ramifications from this, however.

I would say the benefit of them having the team pay them in crypto is that the team then has to pay the transaction fees instead of the player if they were to take their bonuses and then get crypto.

[incognito_man]

15 minutes ago, blkwdw13 said:

I would say the benefit of them having the team pay them in crypto is that the team then has to pay the transaction fees instead of the player if they were to take their bonuses and then get crypto.

only if the team agrees to it

[JJ6]

On 4/26/2021 at 10:36 AM, Nut said:

Lol, enjoy your worthless dollar in a few years after it gets eaten alive by inflation.

I only carry enough cash for bills/small emergencies. Everything else is invested in cryptos/ETFs. In the process of buying land too.

Can't believe people are still betting against crypto. Idiots. 

[scar988]

It's more of a paperwork thing. The team pays him the money, but they do it through an intermediary who buys the crypto and then transfers it to the player. No different than paying a player in stock. He's paid in cash, but then an intermediary actually goes and buys the stock. 

[kingseanjohn]

5 hours ago, incognito_man said:

you probably don't either lol

very few people really understand it

I'm not an expert and I won't claim to be. But I've watched several documentaries, read quite a bit on the subject, and I'm a fall semester away from graduating with a degree in computer science. So while I'm not an expert, I do have a fairly decent understanding.