Regulatory focus should also pay attention to labor law in Web3
The Real Problem in the Web3 Space That Requires Regulatory Attention
The world of Web3 and cryptocurrencies has been a subject of much regulatory debate, with authorities worldwide grappling over whether crypto assets should be classified as securities, commodities, or something entirely new. But while regulators are preoccupied with defining the legal status of cryptocurrencies, an equally pressing issue has flown under the radar: labor law in the Web3 space.
A Global Workforce Without Local Protection
One of the defining features of the Web3 industry is its global nature. Crypto companies, like those on platforms such as 13desk, often operate without borders. They hire talent from all over the world, pay in cryptocurrencies like USDT, and offer enticing remote-working opportunities. However, the decentralized and global nature of these businesses also means they frequently bypass local labor laws.
Employees working in the crypto space are often left vulnerable when companies decide to downsize or shut down. With these companies not being registered in the local jurisdictions of their employees, workers can face significant challenges when it comes to enforcing labor rights, particularly during the layoff or firing process. In many cases, the termination comes abruptly—an email, or sometimes, complete silence—and employees are left with no severance, no recourse, and often no formal employment contract to rely on.
The Reality of High Turnover in Crypto Jobs
The crypto industry is notorious for its high turnover rate. Companies rise and fall with the volatile market, and it’s not uncommon for them to disappear overnight. When they do, employees are often left in the lurch. Without proper contracts, many are unable to claim benefits or compensation. Worse still, pursuing legal action is often out of reach. Many crypto companies are incorporated in offshore jurisdictions like the British Virgin Islands (BVI), far beyond the grasp of local labor laws. Even if employees wanted to file a civil lawsuit, they may be unfamiliar with the local legal framework, unable to afford the high costs of international legal proceedings, or unsure if the listed directors are the real decision-makers.
An Exploitable Workforce
The allure of working in crypto—remote work, flexible hours, and the promise of being part of the next technological revolution—draws in many young professionals. However, as crypto news outlets frequently report, the industry can be rife with exploitation. In 2024, there are approximately 13,217 cryptocurrencies worldwide. While some of these are inactive, there are a large portion of cryptocurrency companies that blossomed from the rest, employing around 211,000 people across the globe. Many of these companies are startups, and while some offer legitimate opportunities, others exploit the lack of regulation, using crypto payments and remote setups to bypass legal obligations.
With little oversight, employees often find themselves in precarious situations, unable to turn to local regulators or labor boards for help. This is a growing concern as more people enter the industry, and the number of crypto jobs continues to rise.
A Call for Regulatory Action
While much of the regulatory focus has been on the financial implications of cryptocurrencies, it’s time for authorities to broaden their scope. Labor laws must be adapted to account for the global, decentralized nature of Web3 businesses. This could involve creating frameworks for cross-border employment contracts, ensuring that companies have legal accountability in the countries where they hire, and enforcing protections for workers who are paid in digital assets.
In conclusion, the crypto industry’s labor issues are a ticking time bomb. If regulators don’t step in to protect workers, the long-term sustainability of the Web3 space may be at risk. Crypto companies may have the flexibility to hire globally, but with that comes the responsibility to treat their employees fairly, regardless of where they are in the world. If these issues are not addressed soon, the workforce that drives innovation in the crypto world could become its biggest casualty.
Key Considerations for Working in the Crypto Space
As the crypto industry grows, it’s essential for employees to take certain precautions when entering this evolving market. First, be clear on where the company is registered and ensure you’re comfortable with its legal standing. Ask if they have a local office and clarify how they will handle your salary—it’s often best to receive payments in your local currency, including taxes, medical coverage, and insurance according to local laws. If no local office exists, check whether they operate through an agent for legal and payroll matters. Always request a formal employment contract, regardless of the company’s jurisdiction, and make sure it includes all relevant headers and details about your compensation and benefits. This will be crucial if you need to file a civil suit, especially in the absence of strong labor law protections. Finally, be alert to red flags such as budget cuts or delayed salary payments—these can be early signs of deeper instability within the company.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
