Restricted SAFE Units (RSUs) are a form of equity compensation that can be issued as cryptosecurities. Using RSUs, an employer promises to issue a certain number of tokens via a Rolling SAFE in return for an individual’s services, according to specific requirements and in accordance with a defined vesting schedule.
The tax implications of Restricted SAFE Units are largely the same as for classic equity compensation via Restricted Stock Units. Because RSUs are linked to future performance, the recipient only becomes the “owner” of the tokens at the time of settlement according to the vesting schedule — which thus tends to be the taxable event — rather than the time at which the initial grant is made.
For tax purposes, RSUs are evaluated using Fair Market Value (FMV). The FMV must be tracked over time since recipients of settled RSUs will usually be taxed based on “the spread”, defined as the difference between the token’s FMV at the time of vesting and the amount paid by the recipient for the tokens.
RSUs do allow for a US-based recipient to file a Section 83(b) election, in which the recipient would pay taxes based upon the tokens’ FMV at the time they were granted rather than at the future point in time at which they are sold.
If they elect to do so, the recipient takes a risk since if the tokens decrease in value over the vesting period (compared to the date on which they were granted), the previously paid tax is unable to be recovered. Notably, a similar situation would arise if the recipient leaves without fulfilling the entire vesting schedule.
Just as with traditional stock rewards, it is critical for a recipient of Restricted SAFE Units to get qualified tax planning advice from a professional accountant certified in their home jurisdiction.
