Remittance firms in El Salvador drag feet over Bitcoin (BTC) despite approval
- Remittance firms in El Salvador are hesitant to adopt Bitcoin, despite being legal tender.
- The firms are only going to adopt the cryptocurrency when they receive interests from customers.
- Cross-border remittances carried out using cryptocurrencies is still less than 1%.
Last week, El Salvador became the first country to adopt Bitcoin (BTC/USD) as a legal tender. President Nayib Bukele stated that Bitcoin will become the main remittance currency for El Salvadorians living abroad.
However, despite the free pass by the government on Bitcoin, remittance firms in the country are not eager to start adopting the cryptocurrency.
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Fintech analyst Kenneth Suchoski, while speaking to Reuters, stated that the remittance firms are waiting on the customer to start demanding Bitcoin services before launching such services.
Low adoption of Bitcoin for Remittance
He also said there will be a problem for the locals receiving Bitcoin from abroad because they operate in cash in most cases.
Suchoski added that the global cross-border remittances carried out using cryptocurrencies are less than 1%.
Because Bitcoin is not yet adopted for cross-border payments to friends and families, global remittance services like MoneyGram and Western Union will be relevant in years to come, he added.
In Theory, Bitcoin offers a cheaper and quicker way for recipients to get funds from their loved ones from abroad without using traditional remittance channels.
Remittance firms looking for ways to add Bitcoin services
Last month, top remittance firm MoneyGram International stated that it has opened 12,000 U.S. retail locations for customers to buy and sell Bitcoin for cash. The company said it wants to build a bridge that will link Bitcoin and other crypto assets to local fiat currency.
Western Union, on the other hand, had initially run a test in the past where it used Bitcoin and crypto. However, the company said it didn’t arrive at a better “use case” that saves cost.
The use of Bitcoin for anonymous transactions has been an issue for regulators, who feel it facilitates money laundering. But companies are now adhering to compliance steps to reduce such risks. Remittance companies may likely do the same or provide a similar step to make sure they stay in touch with the law.