The cash and stock swap transaction will see Paydrop’s senior leadership team join the Tennessee-based Cornerstone as it scales in preparation for “significant growth.”
Cornerstone uses a conversion engine called Hedge that lets employers and their workers convert part of their payroll compensation into crypto and deposit it into their chosen wallets. With the acquisition, Cornerstone will be able to provide conversions for “any independent contractor, gig economy worker, and non-traditional income earning employee within the United States,” the company said.
According to Cornerstone, compensation is paid from employer to employee using government-backed currency, so neither side incurs “a separate taxable event at the original point of compensation.”
“Acquiring Paydrop just seemed like a no brainer for both parties and will open up even more opportunities once Paydrop is connected to Hedge’s pay conversion engine,” said Cornerstone founder David Schwartz. “Hedge is a convenient, frictionless way for virtually anyone to join the movement for monetary freedom.”
Steven McClurg, Paydrop’s former CEO and now an advisor and board member at Cornerstone, said the acquisition marries Hedge’s conversion of W-2 and other income to Paydrop’s 1099 payment capability, providing added support to workers who wish to be paid in bitcoin, litecoin, cryptocurrencies or stablecoins.
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PYMNTS looked at the issue of cryptocurrency payments for global workers last year in our conversation with Alex Bouaziz, CEO of the payroll company Deel.
See also: Deel CEO: Crypto Gives Employers New Payroll Option to Attract Global Workforce
He said there are several advantages to offering global workers payment in crypto, such as speed and cost. Bouaziz added that many remote workers are knowledge workers, which means they likely aren’t living paycheck-to-paycheck and are content to invest a portion of their salary into cryptocurrency.
“It is a matter of flexibility,” he said. “From the employer’s standpoint, it gives them the flexibility to say, you do what is right for you. It is a big leap from what people had before, when they were forced into a specific payment method.”
