First determine whether the wages are subject to mainland rules
The Interim Provisions on Wage Payment apply to employees who have formed an employment relationship with an employer within the territory, and Article 5 requires wages to be paid in the lawful currency. Where an overseas company directly hires a person working in the mainland, issues of the employer's capacity to employ, the employment relationship and the applicable law also arise, and no conclusion can be drawn merely from the statement that "the person is in the mainland" or "the contract is overseas." It should be ascertained who recruits, manages, assesses and pays the person, and whether a mainland-affiliated employer exists.
USDT does not become a US-dollar wage merely because it is pegged to the US dollar
Yinfa [2026] No. 42 clarifies that virtual currencies such as Tether do not have a legal status equivalent to that of the lawful currency. Assuming a contract provides for a monthly wage in RMB and the company instead transfers an equivalent amount of USDT, the employee may still assert that wages were not paid in accordance with the law; an on-chain record of receipt does not of itself prove that the wage obligation has been performed. A signed declaration consenting to receive payment in crypto assets likewise cannot serve as a reliable basis for the company to be relieved of its mandatory wage obligations.
Base salary, bonuses and genuinely independent services must be examined separately
A fixed salary cannot be renamed a project bonus and then continue to be paid in crypto assets; genuinely independent contracting, overseas employment or other remuneration must be reassessed according to the specific relationship and the applicable rules, and mainland employment conclusions cannot simply be carried over, nor can stablecoin payment therefore be found to be feasible. Regardless of what the remuneration is called, the recipient's tax status, the nature of the income and the filing obligations must be confirmed. The form of payment is not inherently a tax-exemption condition.
Where wages have already been paid in crypto assets, reconcile the accounts first and then rectify
It is advisable to compile the employment contract, payroll schedules, amounts payable, withholding records, the type and quantity of crypto assets and the actual transfer times, and have employment and tax professionals verify the unperformed obligations and how to address them. Employees should not be required to sell the crypto assets themselves first, or to sign a waiver of claims, in place of rectification. Going forward, a lawful wage payment channel should be established, wage statements should be provided on schedule, and how overseas funds may be used for remuneration in compliance should be explained separately.
Recommended actions
- Verify the actual employer, the employment relationship and the applicable law, rather than looking only at the title of the contract.
- Stop using USDT as a substitute payment method for lawful wages in the mainland.
- Reconcile month by month the amounts payable, paid, withheld and potentially in arrears, and design a lawful path for correction.
Information note: This article provides general information only and does not replace legal advice based on specific facts.
References
- Interim Provisions on Wage Payment (Lao Bu Fa [1994] No. 489) — Former Ministry of Labour / Shanghai Municipal Human Resources and Social Security Bureau
- Notice on Further Preventing and Addressing Risks Relating to Virtual Currency and Other Matters (Yin Fa [2026] No. 42) — People's Bank of China and seven other departments
- Individual Income Tax Law of the People's Republic of China — Standing Committee of the National People's Congress / State Taxation Administration
