According to the startup’s founder, Daniel Vogel, within the last six months, the use of digital currency sent from Mexicans to loved ones back home has increased at a rate of 15 percent. Last week’s transfer in crypto amounted to US$11.5 million.
At that speed, Vogel estimates that by year’s end, five percent of all remittances from the United States to Mexico will be in cryptocurrencies.
The benefits of crypto-remittances
The rising trend of crypto reliance comes from the desire to keep money as intact as possible when wiring it from one place to another. We all know what happens when intermediaries get their hands on any amount of money; they take a cut.
The standard rate is about four percent of the amount being sent. Not to mention currency conversion rates from banks can also subtract from the sum. All this greatly distorts the budgeting plans of those sending money and their families who receive it.
It’s also estimated that remittance sending via cryptocurrencies is faster and doesn’t take a toll on the wiring fee. This is possible since transferring parties are reportedly charged less than one percent over the amount being sent.
A big market in Latin America
Now, let’s take this equation and factor in that are over 28.5 million people from Latin America residing outside the country in which they were born. Then, consider that in 2018 there were over US$85 billion in family remittances.
This adds up to a market plagued with a whole lot fees and commissions, making the region a hotbed eager for payment solutions.
Take note, the rising trend for crypto in remittances can be observed not only in Mexico but in other countries like Venezuela as well. However, no official numbers have yet to be released.
All things considered, fintech and cryptocurrency may be a transparent alternative for that hard-earned money. Plus, it’s reassuring to know that startups like Bitso are complying with Mexico’s latest fintech law.
Yet, users should know that the government doesn’t regulate cryptocurrencies. User beware; for this represents a risk that every family shall have to manage on their own.