Blockchain & Crypto in China
The date is January 4th, 2022, it’s a brand new year and as you may know if you’re reading this, all cryptocurrencies and crypto trading activities are forbidden in China. In 2021, this policy change caused all bitcoin mining activities to pack up and move elsewhere along with a handful of crypto projects that didn’t want to stick around long enough to test their luck. To clarify, blockchain services, research & development is perfectly legal and encouraged in China, but any affiliation with cryptocurrency puts companies in legal jeopardy.
China remains one of the leading countries in Blockchain research & development with the government publicly praising the technology in 2019 and stating it would be key to China’s future. China is the birthplace of popular and pioneering platforms like NEO, Binance, OKex, Ontology & Tron and boasts a very active blockchain community including blockchain engineers, something very attractive to blockchain projects world-wide.
In the past, companies would often set up representative offices in China for R&D and/or marketing operations in China, but this is now a risky move. The dilemma here is that due to government regulations, a blockchain company that wants to hire blockchain teams in China for R&D purposes is now unable to do so by setting up a local entity if their company is affiliated with cryptocurrency. However, a new solution called Employer of Record (EOR) is a better, legal and easier solution to hire blockchain teams in China for the purpose of research and development and non-cryptocurrency use cases for blockchains.
What is an Employer of Record (EOR)?
An employer of record is an organization and service where you can outsource your overseas HR, payroll and employment liabilities to an entity located within your country of interest. The employer of record signs 2 contracts: one with your organization and one with your chosen employees / remote workers. Under this employment structure, the EOR is legally responsible for your employees, their salaries and benefits. This is the best, fastest and safest solution to expanding operations overseas notably for R&D, client support and marketing.
…Not to be confused with a Professional Employment Organization (PEO)
Commonly confused with and listed alongside EOR, a PEO or Professional Employment Organization is a service where you can outsource your HR, but not your liabilities meaning you still need a legal entity in the country. Hence, technically speaking, PEO is not the correct service for hiring teams overseas. However, these two terms are commonly (and incorrectly) used interchangeably.
Why EOR in China is ideal for blockchain companies
1. Safe for company & remote employee
Using EOR for your team in China means you are outsourcing your employment liabilities and no longer need a company on the ground to operate. Advantageous considering the political climate and frequent change of stances regarding cryptocurrency-affiliated companies. You maintain a normal working relationship with your China-based team while the EOR acts as the legal employer for your team. Your company is safer by not having an entity in China and your China-based employees are safer because they are being paid in CNY and employed compliantly with taxes & full mandatory benefits.
2. Easier than setting up an entity
Using an Employer of Record service to legally employ your remote workers in China is often seen as the new and modern model to expand overseas with. No longer do you have to set up a company and gather legal paperwork and get them notarized and then translated in a painful paper-based process that takes months of your time and thousands of dollars. Now you can simply sign a standard company-to-company contract and voila! In less than a week your team can operate in China in a fully legal manner.
3. Payment in your preferred currency
HROne’s EOR service accepts multiple currencies from the employer and then delivers salaries to the employees on payroll in CNY to assure compliance and for your employee’s convenience. This is especially interesting for blockchain and cryptocurrency companies. All transactions in China are handled in CNY.
The future of blockchain & EOR
As we enter an era where remote work is increasingly becoming the norm, EOR services will play an increasingly important role in global business. As a certified employer of record and payroll firm, we also believe blockchain will play an important role in the EOR and payroll industry as data security and privacy become bigger and bigger concerns for consumers.
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