Cryptocurrency exchange Coinbase is after a share of the $700 billion remittance market with a new pilot program launched in Mexico.
The Delaware-headquarted firm is touting its crypto-powered alternative as a cheaper way to send money home than competitors like Western Union.
The program is free to use right now. It plans to start charging for the service on March 31 — after which, it claims it’ll be between 25% and 50% cheaper than current options.
Coinbase teamed up with payment processor Remitly to allow residents to swap received crypto for Mexican Pesos at reported 37,000 reported locations across the country.
Remitly will facilitate the withdrawals at outlets such as convenience store Oxxo and banking service provider BanCoppel. Alternatively, user funds can be stored as crypto in a Coinbase account.
Coinbase remittance a hedge against fiat
As Coinbase notes in a blog post, $700 billion was sent from the US to family members in other countries last year.
Indeed, the top US crypto exchange is keen to reiterate crypto’s potential to hedge against potential devaluation of local currencies.
“If they choose to keep their funds on Coinbase, they can simply hold the crypto asset they received or convert and invest their balance in any of the 100-plus cryptocurrencies that Coinbase supports,” it wrote.
“That includes USDC, a stablecoin pegged to the US dollar, which will help the recipient hedge against any devaluation of their local currency.” Coinbase is one of USDC’s primary backers.
For scale, the Mexican Peso has lost 1.14% against the US dollar since Coinbase went public last April. The exchange said it is considering launching the remittance service in other areas with similar economic struggles.
Meanwhile, Coinbase stock is still recovering from a record low close in January. The company’s share price is still down more than 40% since the end of its first day of trade.
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H/T: [South China Morning Post]