Widespread adoption of cryptocurrency as a method for sending money across borders, which greatly improves/removes intermediaries, becomes prevalent by 2026. The World Bank estimates that more than 280 million migrant workers annually send between $800 billion to $1 trillion USD in 'remittances' back into their respective home countries from their workplaces.
Historically, migrant workers have relied on traditional forms of sending remittances via the banking system, which have ranged from 6-7% in costs associated with wire transfers. With the introduction of blockchain technology, those costs can now be reduced to below 1% when sending a remittance compared with traditional methods.
There are two main factors driving the adoption of cryptocurrencies as a means of sending remittances: speed and cost. Cryptocurrencies, such as stablecoins USDT and USDC, can process payroll in minutes rather than days. Bangladeshi freelancers who previously could only be paid in currency at the bank now receive global payments via wallets such as Binance or Phantom.
Remittance Cost Savings
Compared with a normal transaction, remittance costs using cryptocurrencies are significantly less expensive than transferring funds using a typical bank transaction (for example, 0.5% vs 6.5%).
Access 24/7
Since there is no restriction on when you can send your money on the blockchain, there are no banking hours or holidays to worry about when sending a remittance using cryptocurrencies.
Improved Financial Inclusion
By utilising decentralised finance, remittances are now available to millions of unbanked migrant workers in South Asia.
According to Chainalysis, it is projected that by the end of 2026, the volume of remittances sent via the blockchain will increase 40% a year, which will amount to a yearly total of $200 billion in remittances sent.
Countries in South Asia have many people living outside of their birth country working& using cryptocurrencies to send Remittances globally. With 10 million Bangladeshi migrant workers abroad, bKash will allow us to send Remittances through Crypto and save approximately 500 million in transaction fees on an annual basis. Local businesses, such as Pathao Payroll, are adopting Stablecoins to pay their drivers to reduce foreign exchange exposure on their incomes.
Regulatory bodies are also accommodating the increased adoption and usage of crypto by forming laws or adapting their regulations, respectively. The Bangladesh Bank has launched a pilot program for its cryptocurrency corridor, and the Reserve Bank of India has relaxed its restrictions on banks involving stablecoins.
- Risks: There remains volatility in the price of cryptocurrencies, but with advancements made to Stablecoin technology, volatility can be mitigated. Regulatory compliance remains a challenge for enterprise usage of cryptocurrency; however, there are positive signals around growing regulation (for example, the EU’s MiCA) and growing regulatory clarity in the US, which should improve both enterprise and consumer trust in using cryptocurrency as a payment system.
- Upsides: There are still risks associated with using cryptocurrency (e.g., the incidence of hacking incidents is currently about 0.1% of the total volume of cryptocurrency). However, companies and institutions that are implementing Central Bank Digital Currencies (CBDC) will likely hybridise with cryptocurrencies.
By 2027, 30% of remittances will be made using blockchain technology, as companies like TCS are already testing the use of crypto for payroll for one million employees worldwide. This dramatic shift in the way people will be able to send remittances will democratise the flow of wealth around the globe.
Responses (0 )