The second largest recipient of remittances worldwide is Mexico. It was as per the statistics of the World Bank last year. Remittances to the nation increased to a record $5.3 billion in July. It is a 16.5 percent increase year compared to the previous year. The strong growth presents vast opportunities for fintech firms.
Many cryptocurrency companies set up shops in Mexico, claiming a share of the burgeoning remittance market. In the last year alone, only half a dozen cryptocurrency giants, such as Coinbase, established operations in the country.
Coinbase launched a crypto transfer service in February geared toward customers in the United States who want to send crypto remittances to Mexico. Customers in Mexico could withdraw their funds in pesos thanks to the product.
Since then, other businesses have joined the venture. The Malaysia-based digital currency exchange Belfrics announced its intention to begin crypto transfer operations in Mexico in August. The company will start by introducing blockchain wallet and remittance service solutions, as stated in the public announcement.
Tether is yet another notable business competing for a share of the crypto remittance market in Mexico. The MXNT stablecoin, backed by the Mexican peso, went live in May with the cryptocurrency company. The company claims that customers will be able to use cryptocurrencies as a store of value and navigate volatility with the assistance of collateralized digital currency.
Local Mexican cryptocurrency businesses, such as Bitso, one of the largest crypto exchanges in the Latin American nation, are already taking steps to expand their reach in a market that is becoming increasingly competitive in addition to the new players.
The Mexican company allied with Circle Solutions, based in the United States, in November 2021. The agency used Circle’s payment system to make crypto transfers from the United States to Mexico easier, thanks to the collaboration.
Factors that drive this sector
Many Mexicans living abroad are a significant driver of the Mexican crypto remittance industry today. The United States and Canada currently have the most Mexican immigrants.
Approximately 62.1 million Hispanic people are living in the United States today, with Mexicans accounting for 61.6% of this population, according to data released by the U.S. Census Bureau in 2020.
According to data from 2021, approximately 94.9 percent of all remittances to Mexico came from the United States, while Canadian Mexicans sent $231 million to Mexico in the second quarter of 2022.
There is a rise in the number of Mexicans emigrating to the United States and Canada. It is driving remittances to new heights. The high demand is spreading to the crypto payments industry.
The rise in remittances over the past few years has also got influenced. It was by the weakening of the Mexican peso and the emergence of a strong dollar.
This has happened in previous crises. It is like the financial crisis in 2008, which threw the Mexican economy into chaos. Mexican businesses and investors often resort to the US dollar in times like these. It possesses a greater purchasing power.
Coronavirus lockdowns began in Mexico in March 2020. Then the US dollar’s purchasing power increased by approximately 30%. Today, Mexicans in the diaspora can use the increased purchasing power of the dollar. It is to make investments and purchases in their home country. It is due to the availability of cryptocurrencies pegged to the dollar. As a result, remittance rates are higher.
Excellent convenience
Blockchain technology eliminates intermediaries from transaction processes. It results in lower transaction costs and shorter remittance processing times.
Structure’s president and co-founder is Bryan Hernandez. Cointelegraph spoke with him. They talked about how these factors will affect the Mexican remittance market. His company offers investors access to both traditional and cryptocurrency financial markets. It is through its mobile trading platform:
Many financial institutions in Mexico are far from rural areas. It makes it difficult for locals to get financial services. They allow people in these areas to access their money without traveling far. Thus crypto remittance solutions are beginning to close this gap.
Additionally, they can assist the unbanked. Over half of Mexicans do not currently have a bank account. You will need a thing to receive funds with crypto remittance services. It is an address for a crypto wallet. This group of citizens finds them convenient.
Conclusion
A lot of Mexicans are embracing the cryptocurrency remittance fad. It is because of their difficulty in trusting banks. Mexicans living in the emigration are often subjected to calculating practices. It has led to many methods making use of crypto remittance solutions. For cryptocurrency trading and investment, you must log onto link.