Crypto exchanges see a spurt in remittances from the Middle East, US : Tech News

Abir Roychaudhary, a 39-year-old engineer working in Qatar, transfers around Rs 2 lakh to his family based in Mumbai every month using traditional cross-border, cross-currency services. This month he tried another route for the first time – he bought cryptocurrencies worth Rs 1 lakh and gave his wife access to his wallet so that she can use the sum when needed.

Many Indian, Pakistani, Bangladeshi and Filipino expats are increasingly experimenting with cryptocurrencies to remit money to their families back home and save on commissions charged by wire transfer companies and other middlemen.

“The process of remittances through cryptocurrencies into India is a lot more efficient and faster than the conventional process, and all transactions are visible on the blockchain network from a regulatory point of view,” said Edul Patel, CEO and cofounder of Mudrex, a global crypto investing platform.

Crypto investments have
seen a spurt even in smaller towns across India and people exploring various uses, industry trackers said.

“Looking at current hype in crypto assets like Bitcoin, Ethereum, Binance Coin, United Farmers Finance and Grain, it should be easy to remit money to India and anywhere in the world,” said Santhosh Bhhandarii, cofounder of United Farmers Finance, a crypto farming platform. “Moreover, you can earn more from this crypto by staking or by providing liquidity in our ecosystem,” he said.

Remittances into India are pegged at about $80 billion, or approximately Rs 6 lakh crore, per anum. These are mainly transferred through banking or other financial channels.

Industry trackers said the way Indians are warming up to crypto assets as well as decentralised finance, remittances through crypto assets is only set to grow, especially because transferring smaller amounts can be expensive through the traditional services.

Globally, several blockchain startups like Satoshi Citadel in the Philippines have started offering services to facilitate bitcoin remittances in a user friendly way.

There are close to 15 million crypto investors in India holding digital assets worth Rs 15,000 crore. All the large cryptocurrency exchanges saw at least 100% increase in their trading and investment in the last few months.

Though Bitcoin was the preferred choice for remittances, its transaction costs are rising, experts said. Currencies like Ripple and Dash are seen as good replacements due to substantially lower fees.

Cryptocurrency remittances became a lifeline for Afghans after Western Union ceased operations for some time after the US withdrew from Afghanistan.

Experts also said crypto is becoming popular in places with high inflation like Lebanon, Turkey and Venezuela.

Experts point out that remittances in crypto are finding favour because people want to protect themselves against hyperinflation.

Most of those looking to remit money are doing so through some of the less volatile crypto assets such as Stablecoins, industry trackers said.

“While remitting money, users would want the value to remain as intended, unhindered by market volatility,” Patel of Mudrex said. “Stablecoins pegged to the US dollar are the preferred choice for doing such transactions. Users mostly use stable currencies like USDT/USDC to do these transfers.”

Cryptocurrencies continue to flourish in India in absence of any regulations.

The Reserve Bank of India (RBI) has had a faceoff with cryptocurrency exchanges in the past. The central bank had asked banks to stop dealing with crypto exchanges, but had to back off following a Supreme Court order.

The government is planning to define cryptocurrencies in a new draft bill and could treat it as an asset/commodity for all purposes, including taxation.