remittances Archives

Remittance Industry Overview:

A remittance is a transfer of money by a foreign worker to an individual in his or her home country. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers’ remittances are a significant part of international capital flows, especially with regard to labour-exporting countries. From the start of this decade India, China, Mexico and Philippines have been the top countries in terms of remittance inflows. Owing to this the remittance startup scenario in South East Asia and Mexico has improved significantly with a touch of cryptocurrencies.

Existing players in fiat currencies:

When it comes to cross border transfer of fiat currencies, there is a standard transaction fee which varies with different countries to carry out the transaction. Most notable companies in this space include Western Union, Money Gram, Ria, TransferWise and World Remit. These companies are pretty old and exist in more than 110 countries making Remittances easy with short processing hours. The volume of transfers of these companies is estimated to be around $750 million per month.

Upcoming Bitcoin based remittances startups:

To capture the remittances market, many Bitcoin startups have come into existence locally in these countries with varied services. FlexM, Fastacash, Sendah, Rebit, Bitspark and Toast are notable startups in South East Asia that have been actively facilitating Bitcoin remittances. Few of these startups also provide facilities of storage in the form of Gold tokens, precious metals and other assets. When it comes to Mexico, chunk of these remittances are estimated to come from US across the border. Bitso and Vogel are two mainstream Bitcoin exchanges in Mexico that offer wallet and merchant services in addition to Bitcoin Trading. They have reported a significant rise in Bitcoin transactions and cross border payments. How Mexican Government would react to the growing popularity of Bitcoin through remittances is to be seen.

One of the two contenders of the US Presidential race Donald J Trump is all set for the big day. With just over a month left, the republic nominee has been very entertaining throughout his campaign. While U.S.A. waits for the decisive day, let’s look into what Trump’s presidency would mean to cryptocurrency enthusiasts:

Trump’s Economic policies:

Source: Moody Analytics Report — Source: Moody’s Analytics Report

At a 2016 Republican convention, Trump declared that he was going to free U.S. from bad trade agreements. He confirmed his anti-globalism position when he said:

“Americanism, not globalism will be our credo.”

He added that U.S. might pull back from NATO commitments which means U.S. would be walking away from the world. The effects of this could be similar to U.K. leaving the European Union. ‘Brexit’ had seen Bitcoin Prices soaring up with investors moving funds into the cryptocurrency. A similar event on part of U.S. might contribute to high prices and mainstream adoption.

A Trump presidency would put in place regulatory reforms on all industries. These reforms aim to remove “least critical regulations”. For Fintech industries, these financial rules were instituted one or two centuries ago. This implies that the regulatory environment may, finally, become far more welcoming for Bitcoin and Blockchain Technology. This may allow U.S. to finally catch up with European countries in terms of Fintech regulations.

While individually few policies might seem positive, on a whole, Trumps economic policies might turn out to be fatal for the economy.

Trump against immigration:

Stopping immigration has been the central theme of Trump’s campaign. He pledged to check immigration and remittances which followed his controversial speech about building a wall along the US-Mexico border. If these measures come into play, then people will start looking for alternative modes of remittance, which is Bitcoin.

If Trump really stands firm on his policies against immigration and remittance, Bitcoin transfers across borders will experience an uptick. This would lead to the development of a healthy Bitcoin ecosystem in U.S. and Mexico.

Trump’s Policies on China and the East:

Trump has vocally proclaimed many times during his campaign that the trade agreements with China will be renegotiated. He persuasively argues that we are currently in a trade war with the global economy resembling a zero-sum game. Nations are outright cheating by intentionally devaluing their currency, making exports cheaper at the expense of others. His economic plan aims to implement a non-zero sum system where trade benefits all. This is detrimental to the interests of Chinese as that would decrease their hold over their exports.

How any movement in Yuan has affected the Bitcoin prices is evident from recent devaluation policies by China. Implementation of the said policy by Trump would put China in a position of discomfort. They would initiate monetary strategies that would make Yuan sufficiently volatile. This would certainly see investments flowing into the Bitcoin market and the ecosystem would never be at equilibrium.

Hence Trump’s policies have an indirect bearing over Bitcoin and would push the currency in a positive light.

Tag: remittances

Bitcoin is tipping the scales in the Remittance Industry: Mexico and Philippines experience heavy adoption