Digital assets continue to grow in popularity and functionality in supporting retail payments and global settlements. As such, it comes as no surprise that there is growing interest by employers seeking to leverage the use of digital assets to replace traditional payment rails, including to satisfy employee compensation obligations for their global workforce.
Canada’s regulatory framework for digital assets is maturing, and in the United States, the GENIUS Act and proposed CLARITY Act represent arguably greater certainty on the legal characterization of digital assets. With the increased use of digital assets as an alternative to traditional payment mechanisms, more employers are also considering the benefits of incorporating digital assets as a recruitment and retention tool.
The question of digital assets forming part of an employee’s remuneration package is more topical now than it has been in some time. In March 2026, Bill C-15 An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025 (“Bill C-15”) received Royal Assent. Bill C-15 introduced the Stablecoin Act, Canada’s first dedicated federal stablecoin framework, which (once in force, expected in 2027) will subject fiat-backed stablecoin issuers to Bank of Canada supervision and to reserve, custody and redemption requirements, as we discussed in a previous post. Thereafter, on May 4, 2026, Tetra Digital Trust launched CADD, the first regulated CAD-backed stablecoin issued by a Canadian financial institution. Together, these and other similar developments may represent a Canadian regulatory anchor to the question of digital-asset pay that did not exist when the leading Ontario authority on the subject was decided approximately two years ago.
The short answer in Ontario: Employees may be remunerated with digital assets, if their remuneration package is structured carefully. The Employment Standards Act, 2000 (Ontario) (“ESA”) sets out a payment-method rule that has limited flexibility, and the Ontario Labour Relations Board (“OLRB” or the “Board”) has signalled that an employer that treats cryptocurrency as a substitute for wages is likely to face challenges, unless an appropriate structure is implemented.
The ESA Framework
Subsection 11(2) of the ESA prescribes three permitted methods for paying wages: cash, cheque payable only to the employee, or direct deposit. A fourth option, being “any other prescribed method,” has not yet been reflected in regulation. The Ontario Ministry of Labour, Immigration, Training and Skills Development’s interpretive guidance reinforces the point: Non-wage benefits may supplement compensation, but they generally cannot replace the required payment of wages by one of the three statutory methods.
The key is “legal tender.” The ESA does not use the word, but the analytical question that the Board has consistently reached for is whether the proposed method of settlement is something an employee can readily use to buy food, shelter and services. Cash, cheque and direct deposit clear that bar by definition. While cryptocurrency may be used to pay for food, shelter and services, given the current Canadian regulatory circumstances, it arguably does not qualify as legal tender.
What the OLRB Has Actually Said
The leading Ontario authority is Yujie Hou v. Kinglory Inc., 2023 CanLII 124314 (ON LRB) (“Kinglory”). The applicants had employment contracts providing an annual base salary of $240,000, with the contractual term specifying that compensation would be paid 50% in cash and 50% in a company-issued cryptocurrency, a token the employer hoped to list on a centralized exchange. The employer paid only the cash component. The applicants applied for a review of the Employment Standards Officer’s award.
In its December 2023 decision, the Board held that the impugned contractual term was void as an attempt to contract out of the ESA. The reasoning was straightforward: Having described the base salary as $240,000, the employer was not permitted to discharge half of that obligation in a method other than the three set out in subsection 11(2) of the ESA. The Board adopted the Director of Employment Standards’ framing that the purpose of subsection 11(2) is “to ensure that employee wages can be easily used to purchase food, shelter and services” and concluded that the employer had not established that the cryptocurrency in question constituted legal tender.
The June 2024 reconsideration decision is, for our purposes, the more interesting one. The employer tried to recast the cryptocurrency component as a non-wage compensation item, citing the well-known line of cases on long-term incentive plans (LTIPs), restricted share units (RSUs) and stock options during the reasonable-notice period. The Board distinguished those authorities but observed that they “may have been persuasive” had the contract described the employee’s compensation as a $120,000 base salary plus an additional $120,000 benefit in cryptocurrency, rather than describing the full $240,000 as base salary.
The Board also noted that the employer had not put forward “any authority for the proposition that an employer can pay part of an employee’s salary in any form other than cash, cheque or direct deposit,” and that to argue otherwise would have required, “at the very least,” some basis for the Board to accept the cryptocurrency in question as legal tender in Ontario.
Read together, those observations suggest that the door is not closed. A widely held, liquid asset that is broadly accepted as a payment mechanism is arguably a different starting point than the company-issued token in Kinglory. The closer an asset comes to behaving like money, the more difficult it is to say that it does not serve the purpose emphasized by the Board, that wages can be readily used for the necessities of life. That space, between the letter of the rules and what an asset can actually do, is where this is most likely to evolve.
Best Practices
A few practical considerations stemming from the Board’s guidance:
- Pay wages in Canadian dollars first, in full. Base salary should generally be denominated in dollars and discharged by cash, cheque or direct deposit, so that the statutory obligation is fully satisfied before any conversion occurs.
- Characterize the digital-asset component as a supplemental benefit. The contract, and any related policy documentation, should frame the digital-asset opportunity as a benefit separate from wages, rather than a method of paying wages.
- Keep the digital-asset element voluntary and downstream of wage payment. The more defensible structures treat the employee’s participation as a genuine election, separately documented, that takes effect only after wages have been paid in full.
- Disclose, disclose, disclose. Volatility, the distinction between wages and supplemental benefits, the mechanics of conversion and the absence of guarantees should all be set out in clear terms before the employee elects in. Employers should also be alive to potential constructive dismissal exposure where the digital-asset component constitutes a meaningful share of the overall compensation package: A sharp decline in value could be characterized as a substantial unilateral change to take-home compensation, and the volatility risk itself is precisely the kind of variation that could give rise to such an argument.
A Note on Canadian Securities Law
Even with the employment-law structure in place, issuing a digital asset to Canadian employees can engage provincial securities laws. Whether a particular digital asset is a “security” or “derivative” under Ontario securities law will depend on a fact-specific analysis; however, employers can often rely on a range of exemptions for the issuance or distribution of compensation instruments to their employees or employees of related entities, similar to the exemptions relied upon to distribute shares, options or other similar instruments more generally. In addition to other potential Canadian securities regulatory requirements, such as those relating to registration and custody, such exemptions must be considered carefully to ensure that they apply to the facts and are available to the employer and other entities that may facilitate the issuance or distribution.
For a conventional issuance of shares, options or other similar instruments, employers generally rely on exemptions contained under Division 4 [Employee, Executive Officer, Director and Consultant Exemptions] of National Instrument 45-106 Prospectus Exemptions, which allow employers to distribute their own securities, or those of an affiliated entity, to their employees, directors, officers and others on a voluntary, self-certifying basis, with no filing requirement. There are also corollary exemptions available to other entities, such as plan administrators.
Beyond securities laws, the registration regime for money services businesses (MSBs) under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) can be engaged by entities that issue or exchange virtual currency in prescribed circumstances. Bill C-15 also includes a consequential amendment to the federal Retail Payment Activities Act (“RPAA”) that would bring payment service providers (PSPs) that use certain stablecoins within the scope and under supervision of the RPAA.
Where the Law May Be Heading
The Kinglory Board’s open invitation, that an employer could provide a basis for using a digital asset to form part of an employee’s remuneration package, is no longer purely hypothetical. Continuing regulatory and commercial developments in Canada, including Bill C-15, also signal a contracting of the distance between traditional fiat and digital assets as payment mechanisms. For example, once the federal framework is in force and the Bank of Canada’s supervision of CAD-backed stablecoin issuers is operational, an employer settling a portion of compensation in regulated, fully-reserved, redeemable-at-par Canadian-dollar stablecoin could be in a position to make a much stronger legal-tender argument than the Kinglory employer could. The United States is moving towards greater ubiquity of digital assets with the GENIUS Act and proposed CLARITY Act. The direction of travel towards acceptance of digital assets as remuneration is therefore clearly visible and, potentially, rapidly accelerating.
In the meantime, the supplemental-benefit route currently provides a viable, defensible structure in applicable circumstances.
In Sum
The jurisprudence and statutory regime, when taken together, suggest that there is a path towards alternative pay structures that keep up with the next generation of remuneration packages. Employers considering crypto-denominated compensation should scope the structure with counsel before launch, particularly on the wage-versus-supplemental-benefit boundary, but also with due attention to potential Canadian securities law implications. With careful structuring, it may well be doable.
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