In a word, no.

The Fair Labor Standards Act (FLSA) regulations state that wages must be paid in cash or its equivalent. Employers may pay bonuses in crypto, but FLSA regulations do not permit base wages to be paid in virtual currency (crypto), such as Bitcoin.

Payments for work are considered “wages” for employment tax purposes, according to the IRS, regardless of the currency use (including cryptocurrency). Federal income tax withholding, FICA, and FUTA taxes would be based on the fair market value of the virtual currency measured in U.S. dollars at the time of receipt.

Another consideration is that fiduciaries need to use extreme care before adding a virtual currency option to a 401(k) plan.