A New Partnership Paves the Way for Salary Payments

The concept of receiving a salary in cryptocurrency has taken a significant step forward with a new partnership between regulated e-money operator AllUnity and Zebec, a firm specializing in stablecoin payroll systems. The collaboration aims to leverage blockchain technology for everyday financial operations, potentially transforming how employees are paid.

Stablecoins are digital assets designed to maintain a stable value by being pegged to a sovereign currency like the U.S. dollar or the euro. This stability makes them a practical alternative to volatile cryptocurrencies like Bitcoin for transactions and payments, allowing users to operate outside the conventional banking system.

AllUnity—a joint venture owned by Deutsche Bank’s asset manager DWS, Galaxy, and Flow Traders—is launching a euro-backed stablecoin named Eurau. According to the announcement, Eurau will be integrated into Zebec’s crypto card products, which are compatible with Apple Pay and Google Pay. This integration would allow users to instantly convert their payroll earnings into spendable funds at millions of merchants worldwide, bypassing traditional bank settlement times, IT issues, and holiday closures.

Global Political Will Clashes with Central Bank Caution

This development mirrors a broader trend, particularly in the United States, where political figures like Donald Trump have advocated for a more significant role for stablecoins. The push is driven partly by a desire to ensure the U.S. dollar remains dominant in emerging digital financial markets. With over $280 billion worth of stablecoins already in circulation, the U.S. Congress has taken steps to create a regulatory framework to formally integrate them into the financial system.

In the UK, senior politicians have expressed similar ambitions. Rachel Reeves, a key political figure, has stated her intention to “drive forward developments in blockchain technology, including tokenised securities and stablecoins.” However, this pro-innovation stance appears to conflict with the more cautious approach of the Bank of England.

The Bank of England’s Stance on Financial Stability

The Bank of England has voiced concerns over the rapid growth of stablecoins, fearing they could weaken the traditional banking sector. Sasha Mills, the Bank’s executive director for financial market infrastructure, explained that proposed limits on stablecoin holdings are intended to “mitigate financial stability risks stemming from large and rapid outflows of deposits from the banking sector.” The central bank worries that a sudden shift of funds from traditional bank accounts to stablecoins could disrupt the provision of credit to households and businesses.

This conservative position has drawn criticism from industry experts who argue the UK is lagging. Gilles Chemla, a professor at Imperial Business School, noted that stablecoins are “becoming the foundation of the global digital economy.” He warned, “London has the talent, the markets, and the history to lead the digital economy, but the delay in implementing a regulatory framework for stablecoins is eroding that advantage.”

Crypto Industry Innovates to Address Safety Concerns

As regulators deliberate, the crypto industry is actively working to address some of the inherent risks. A major weakness of many cryptocurrencies is the finality of transactions, which makes it difficult to reverse payments in cases of fraud or disputes. To solve this, Circle, the world’s second-largest stablecoin issuer, is exploring methods to enable refunds.

The company is developing a system where parties can agree to counter-payments under specific circumstances, similar to the chargeback mechanisms used by credit cards. This move to adopt some of the safety features of traditional finance marks another crucial step in preparing crypto for mainstream adoption by building the trust and security that consumers expect.