Crossing Borders With Crypto
Bloomberg Businessweek|December 06, 2021
A Mexico-based startup says it can send remittances from the U.S. cheaper and faster
By Andrea Navarro and Max Reyes

Even as cryptocurrencies have skyrocketed in price, there’s always been the question of what they can really be used for. One of the stronger cases for use is remittances—the cross-border cash transfers that have long been dominated by the likes of Western Union Co. and MoneyGram International Inc. Intuitively, a technology that allows one person to send money to another without an intermediary could make remittances quicker and cheaper.

There are still huge barriers, from the wild volatility of many cryptocurrencies to the complexities of buying them in one country and then converting them back to traditional cash in another. Bitso, a Mexico City-based crypto trading platform, says it’s making a dent. It estimates it’s helping money transmitters move around 2.5% of the more than $40 billion a year in remittances flowing across the border from the U.S. to Mexico.

Bitso doesn’t offer remittances directly on its crypto trading app, which has more than 2 million users in Latin America. Instead, so far it’s been doing work behind the scenes for money transfer services, which can use Bitso’s API, a technology that shares data among apps or services. One such company is Bridge21, a U.S. service that says it’s been using crypto for Mexico-bound remittances since 2016. “Depending on the cryptocurrency you use, it can take minutes or even seconds to move the money as opposed to days,” says Will Madden, Bridge21’s chief executive officer.

These businesses can collect dollars in the U.S. and convert them to crypto, which can then be exchanged for pesos to be paid out in Mexico. Bitso’s customers handling remittances can use different tokens, but one option is to swap their currencies for the USDC stablecoin, a cryptocurrency that’s pegged to the U.S. dollar, which means its price is supposed to remain $1 at all times. In a big chunk of these transactions, users don’t even know their money is being turned into crypto along the way, says Bitso co-founder and CEO Daniel Vogel.

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