El Salvador Could Set Precedent for Bitcoin Remittance Payments

Share Article
In Brief
  • By adopting Bitcoin as legal tender, El Salvador is setting an example that could be followed by other Central American countries.

  • These countries are waiting to see if the adoption of bitcoin as legal tender cuts the cost of remittances.

  • “If the cost of remittances drops substantially, other countries will probably seek that advantage and adopt it," said Dante Mossi.

  • promo

    Stake your points and qualify for the 200,000 USDT prize pool. Start staking now!

The Trust Project is an international consortium of news organizations building standards of transparency.

By adopting Bitcoin as legal tender, El Salvador is setting an example that could be followed by other Central American countries.

Sponsored



Sponsored

Specifically, these countries are waiting to see if the adoption of bitcoin as legal tender cuts the cost of remittances. Notably, a recent report from Bank of America anticipates that this will be just the case. “If the cost of remittances drops substantially… other countries will probably seek that advantage and adopt it,” said Dante Mossi, the executive president of the Central American Bank for Economic Integration (CABEI). 

According to the regional developmental bank, remittances are an important source of income for millions of people. Many in the region lacking access to bank accounts or credit cards rely on money sent home from relatives abroad. Mossi called the plan an “out of this world experiment” to increase financial inclusion.

Sponsored



Sponsored

CABEI support

As the regional development bank, CABEI is providing El Salvador technical assistance on implementing the cryptocurrency. Notably, this kind of assistance had not been offered by the World Bank, which cited environmental and transparency drawbacks.

CABEI added that it had a “fiduciary obligation” to provide this help, as it could also potentially benefit other countries in the region. Mossi said this was because the Central American nations that receive the most remittances are those most likely to favor using bitcoin. “Guatemala, Honduras and El Salvador are the countries that would have the most to gain if the adoption of bitcoin lowered the cost of sending remittances,” Mossi said.

Crypto remittances

Currently, the volume of global cross-border remittances in crypto stands at 1%, according to Autonomous Research. However, crypto is soon expected to account for a larger slice of the over $500 billion in annual global remittances.

Latin America’s largest crypto platform Bitso reported processing about $1.2 billion in remittances last year. This amounted to 2.5% to 3% of the yearly remittances’ volume between the U.S. and Mexico. Meanwhile, crypto adoption is also increasing in emerging markets, such as Indian and Vietnam, where remittance is also prevalent.  

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Sponsored
Share Article

Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

Follow Author

Limited offer! Learn to mine and trade crypto today for free

Join

Earn up to $10,000 USD every week in CoinFLEX AMM+ Arena!

Earn Now

Be our Supreme Scorer and qualify for a grand prize pool of 200,000 USDT!

Join