Coinbase, the leading cryptocurrency exchange in the US, has announced today that it has launched a trading program that enables crypto recipients in Mexico to cash out their funds in pesos. With the development, Coinbase aims to shake up the $700 billion global remittance market.
In 2020, ex-pats and immigrants from around the globe sent around $700 billion from the US to their families and friends back in their home countries, according to statistics by the World Bank. However, several challenges still exist with today’s traditional cross border payment offering. For example, sender fees can go up 6 to 7%, and recipients can only receive money in cash in their local currency. Furthermore, they do not have an option to save, grow or protect their funds from losing purchasing power due to inflation.
As a result, Coinbase has introduced the ability for recipients in Mexico to cash out their cryptocurrency holdings in their local currency. Low transaction fees for sending and cashing out cryptocurrency and flexibility in how to store funds would allow recipients to keep even more of their funds.
Crypto coins like Bitcoin are regarded as an important way for people to send funds to friends and family abroad due to the borderless nature of cryptocurrency and fewer intermediaries than traditional currency transfers.
Therefore, consumers in Mexico can now convert cryptocurrency sent into local fiat currency (Mexican pesos) at over 37,000 physical retail outlets and convenience stores across the nation. In addition, users can save or invest their funds in a Coinbase account.
Coinbase stated that the new service will be free of charge until March 31, after which users will be charged an ordinary fee, which is still 25-50% cheaper than traditional international payment options.
Although the new program will start in Mexico, Coinbase plans to consider adding other regions over time.
Transforming Digital Payments
Coinbase is still going deeper into traditional financial services to provide more users with easy access to crypto-first financial services and be ready for any trade or purchase. Last month, the exchange partnered with Mastercard to classify NFTs as digital goods to allow a wider group of consumers to purchase non-fungible tokens. Buying NFTs has not been easy for most users. That is the reason why Coinbase and Mastercard are working on transforming payments for such tokens.
In December last year, Coinbase acquired FairX, a US-based CFTC-regulated derivatives exchange to unlock the way retail and institutional investors participate in the crypto economy. Last year, the firm allowed U.S. users to convert any percentage of their paychecks directly into cryptocurrencies like Bitcoin with no fees.
