Paying Athletes in Crypto: Legal Issues under English Law

Introduction

In recent years there have a scattering of high-profile experiments with paying athletes wholly or partially in cryptocurrency. As part of Coingaming Group’s sponsorship of Southampton FC, players were reportedly offered the option to be paid their bonuses in bitcoin. David Barral’s January 2021 transfer to Spanish club Internacional de Madrid also made headlines as the first football transfer in a major league to be completed in bitcoin.

Outside of those experiments, however, full or partial cryptocurrency-based salaries remain the exception. That is perhaps unsurprising given the lack of widespread acceptance of cryptocurrency as a payment method for goods and services.

Three Key Issues

Historically, under English law, the Truck Acts prohibited the payment of employees in goods or services in place of the “current coin of the realm”.

Although that legislation is confined to history (such that there is no longer any per se legal prohibition on remunerating employees in cryptocurrency), there remain several legal “danger areas” which our employment experts would highlight to clients when considering such agreements.

1.     Clear agreement and dealing with volatility

To state the obvious, if a contract provides for payment of a monthly salary of 10,000 pounds sterling, paying in bitcoin of that value would not discharge a club’s obligation to pay the contractually agreed remuneration. The athlete must agree to being paid in that way.

That said, both club and athlete should exercise caution before contractually agreeing to payment in cryptocurrency. Its inherent volatility can swing both ways, with athletes receiving a significant windfall or shortfall depending on the market. Some have appetite for that risk in their investments, but few have that appetite with their salaries. It is likely preferable, and more certain, for both club and athlete to denominate salary in sterling, even where payment is made in cryptocurrency of equivalent value at the time.

For example, suppose an athlete’s contract specifies a monthly salary of 0.5 bitcoin. If the value of bitcoin is £50,000 at the start of the month but drops to £30,000 by payday, the athlete would receive only £15,000 rather than the £25,000 they might have anticipated. Conversely, if the value rises to £100,000, the club would effectively be paying £50,000 – a significant overpayment against the club’s budget. By contrast, if the contract instead provides for "cryptocurrency equal to £40,000 at the date of payment", both parties have certainty: the athlete knows what they will receive in real terms, and the club can budget accordingly.

2.     Taxation

HMRC guidance makes clear remunerating an employee in cryptocurrency does not avoid obligations to pay income tax and National Insurance. Cryptocurrency received as employment income is treated as a “readily convertible asset”, with PAYE tax and NIC due on the sterling value at the time. Any club paying athletes in cryptocurrency must therefore report and withhold tax just as if paying in sterling.

Furthermore, if the athlete holds the cryptocurrency and it increases in value, any appreciation will be subject to Capital Gains Tax upon eventual disposal. As a result, an athlete could end up paying income tax on receipt and CGT on disposal, essentially taxed twice on the same cryptocurrency token (see HM Revenue & Customs ‘Cryptoassets Manual’ (updated 2024) at CRYPTO20000 et seq.).

For example, an athlete paid 1 bitcoin in wages when the market price is £80,000 would pay income tax on that sum. If the athlete then held that bitcoin (rather than converting it immediately) and the value increased to £90,000, they would be liable for CGT on the £10,000 increase.

3.     Minimum wage compliance

Benefits in kind and “vouchers, stamps, or similar documents” capable of being exchanged for money, goods, or services, do not to form part of a worker’s remuneration for the purpose of the National Minimum Wage Regulations 2015 (see Regulations 10(f) and (g). and HM Revenue & Customs ‘National Minimum Wage Manual (updated 2022) at NMWM09000). Accordingly, there is a significant risk for employers that cryptocurrency would not be considered qualifying remuneration for the purpose of those Regulations. It would therefore be strongly advisable for an employer to pay an amount equivalent to the National Minimum Wage in pounds sterling, in addition to any sums payable in cryptocurrency.

Even if that were not the case, the volatility of cryptocurrency has the potential, at least for lower-earning athletes, to cause their remuneration to fall below National Minimum/Living Wage.

Conclusion

The above issues are only the tip of the employment law iceberg for an athlete or club considering an arrangement under which the athlete is remunerated fully or partially in cryptocurrency. Matters such as holiday pay, pension contributions, and sick pay will all need to be properly considered and factored into the contractual drafting.

Paying wages in cryptocurrency means applying law designed with regular money in mind. Any party seeking to enter into such arrangements is therefore well advised to seek proper legal and taxation advice before doing so.

If you have any questions about employment issues in sport, including in relation to how cryptocurrency interacts with existing English legislation, we would be happy to provide you with advice. Please reach out to Nick Williams (Barrister at Morgan Sports Law) at nick.williams@morgansl.com for a confidential discussion.