Fall in Bitcoin price will not impact inward remittances

To date, stablecoins represent the most-used currency with regard to remittances

Mumbai: The recent 17 per cent fall in the price of Bitcoin will not have any impact on the remittance of money through the crypto currency in the country, feel the experts.

Even as the crypto currency has witnessed price correction, it will not have its impact on the remittances.

Citing the reason, Sathvik Vishwanath, CEO & Co-Founder of Unocoin told Bizz Buzz that buying and selling happens simultaneously. As a result, volatility in crypto currency is zero.

To date, stablecoins represent the most-used currency with regard to remittances.

According o a McKinsey report, cross-border transactions represent 20 per cent of total transaction volumes in the payment's industry, yet they generate 50 per cent of its transaction-related revenues. With popular stablecoins like DAI and USDT supported by the crypto domain, users have the ability to send and receive stablecoins across borders at a fraction of the current cost. In 2020, remittances fell sharply by roughly 28 per cent due to the effect of the coronavirus pandemic.

Why did the remittance fall?

Well, migrants from USA & Middle East countries are the largest contributor to Indian Remittance inflows.

Since pandemic, remittance has come down due to lockdown and lack of work for informal working sector in construction and industry. In Nigeria, cryptocurrency prices are 20-30 per cent higher than the international market.

"But in India, we have not seen such price movement despite increasing demand in last few years. In US and Middle East cryptocurrency are legal and possibility of migrants relying on crypto for remittance needs to be overlooked. Impact of crypto on remittance inflows and India Dollar system need to studied by government," says Gaurav Mehta, Founder, National Digital Asset Exchange (NDAX).

Meanwhile, Unstoppable Domains, a company building blockchain domain names, today announced that cryptocurrency exchange Unocoin, will integrate crypto blockchain domains to reduce remittance costs across India, and simultaneously simplify sending and receiving cryptocurrency.

Unoicoin, which claims to have 12 lakh users in the country, anticipates the partnership with Unstoppable Domains will boost the remittance market, and, in turn, contribute to economic growth, consumption, and investment.

Average global remittance fees in approximately 7 per cent which includes forex conversion and facilitation fees. Banks are by far the most expensive method to remit money, with fees averaging 10.8 per cent which should not have been case in Digital World. Innovative solutions like Abra, backed by Ratan Tata are trying to remittance market and India is largest beneficiary of remittance.

As the Covid-19 pandemic continues to unfold with new strains of virus, economic crisis will continue and impact of policies will have ripple effect. For low and middle-income countries (LMICs), the amount of money migrant workers send home is expected to decline from single digit to double digit by end of 2021, Mehta said.

Traditionally, remittances are conducted through US-based agencies like Weston Union and MoneyGram.

However, it is likely to fall within 1 per cent in case the country has a crypto-friendly policy framework in place. Not to mention that the country is already in the process of policy formulation for the same.

Commenting on it, Vishwanath said, "The remittance fee has every chance to fall down up to 1 per cent in case there was a crypto-friendly regulation in the country."

As of now, around $90 billion inward remittance was happening in the country per annum, mostly from the countries like the US and UAE. The remittance was increasing at a CAGR of 7-8 per cent except for the year gone by in which it was badly hit due to Covid-19.