In the last week alone, transactions worth 11.5 million dollars were made. Remittances In Crypto Currencies Would Represent 5% Of The Total By The End Of 2019.
At the end of this year, 5% of remittances sent from the United States to Mexico would be made through crypto currencies, due to the ease of operation of these mechanisms, as well as a reduction in costs, which means that this type of assets begins to gain ground in a market that only in 2018 reached $33.480 billion dollars.
In a meeting with media, Daniel Vogel, co-founder of the virtual asset exchange Bitso, said that at least in the last 20 weeks has seen a growth of 15% per week in the use of crypto currencies to send remittances from the United States to Mexico, and only in the last reached an amount of $11.5 million dollars.
About 20 weeks ago was recorded an amount of $28,000 dollars (weekly). We are growing more or less 15% weekly, last week reached an amount of $ 11.5 million dollars for remittances with crypto currencies.
Remittances In Crypto Currencies Would Represent 5% Of The Total By The End Of 2019
“The Bank of Mexico estimates that the average volume of remittances sent in the first part of the year was $688 million dollars per week.
If we have this rate of growth, which is the expectation, at the end of the year would be sending 5% of remittances from the United States via crypto currencies,” said Vogel.
He explained that for some months Bitso launched a product called On-Demand Liquidity, by which money transmitters in the United States that offer to send remittances to Mexico use the Ripple crypto currency, called XRP, to send and then settle operations in the country, which makes there are fewer intermediaries in the operation compared to the traditional sending scheme.
“Normally an operation is made in the United States and then is centralized in various markets, where the money goes from intermediary to intermediary, and then reaches a banking institution in Mexico, and from there basically there is a dispersion to several small shops where normally the transfer ends in cash,” said Vogel.
Process of sending remittances with crypto currencies
- The person in the United States goes to a money transmitter to send the money to Mexico.
- The transmitter purchases the equivalent of the XRP remittance from a virtual exchange of crypto coins.
- The foreign exchange trades that amount in Bitso.
- Bitso receives the amount and immediately issues a payment order to transform that amount into pesos.
Automation reduces costs
According to the Bitso manager, the virtual assets automate the remittance sending process, which translates into a reduction in cost and time, since, for example, when the traditional sending can take up to four days to materialize, with the use of crypto currencies this time can be reduced to 20 minutes.
“By changing the operating system to an automated thing where what is raising the money are machines, many efficiencies are allowed.
A transfer is made from the U.S. to Mexico and that crypto currency is converted into a payment order (SPEI transfer) to settle in cash. That eliminates many risks, mainly the exchange,” he said.
Vogel added that in traditional remittances, as there are so many intermediaries involved, the cost of the fee per transaction is much higher.
However, with the crypto currency system, as there are fewer institutions in the process, these costs are substantially reduced.
According to the World Bank, the average cost of a remittance from the United States to Mexico is 4.5% of the amount sent.
For Vogel, although these costs depend on the transmitters involved, only the cost of transferring via Ripple is fractions of 1 peso, which translates into a lower fee on the operation.