Understanding the role of cryptocurrencies in remittances

The remittance industry, responsible for transferring billions of dollars across borders annually, is experiencing significant transformations driven by technological advancements and shifting economic landscapes. Forget going to money transfer operators, spending exorbitant fees, and waiting for the payment to arrive days later; the evolving digital landscape and cryptocurrency industry are changing all that.

Remittances are a non-commercial transfer of money, most often used by foreign workers and migrants sending funds to relatives and friends in their home country. With the rise of globalisation and easier access to travel and work abroad, the remittance market has seen significant growth year on year. According to Allied Market Research, the global remittance market was valued at USD 784.25 billion in 2022 and is estimated to reach USD 1,329.92 billion by 2032. The expansion of the industry largely varies depending on the region, with Asia-Pacific taking the lead due to the popularity of remittances in countries such as China, India, Mexico, and the Philippines.

Research from the World Bank on personal remittances suggests that for certain countries, remittances received represent a noteworthy percentage of the countries’ GDP, with some countries such as Lebanon reaching as much as 35%. On the other hand, the largest remittance transaction values are recorded in the United States (Statista, 2024); usually, first-world countries tend to be the source of remittance payments.

What drives the growth of this market? An important factor is the spread of digital remittance options, where users with internet access can easily send money abroad from the comfort of their homes. While the days of visiting physical stores or money transfer operators are not yet behind us, digital transfer options are taking the lead thanks to their ease of use, efficiency, and lower costs. Besides this, digital transfer options and new technology help democratise access to payments and banking, without consumers having to rely on monopolistic companies who gain control of certain regions.

A seemingly separate market but one that is showing impressive growth rates in a relatively short amount of time is the cryptocurrency industry. Initially considered notably more volatile than fiat and viewed with a heavy dose of scepticism by many, crypto has the potential to give a boost to the remittance market. It already does as crypto adoption is on the rise, with an estimated 560 million crypto users worldwide. 

One of the most revered features of blockchain technology and, subsequently, cryptocurrencies, is decentralisation and thus the lack of intermediaries involved in the transaction process. For the longest time, the remittance market was dominated by corporations such as Moneygram and Western Union and associated with high costs. Decentralisation allows for direct peer-to-peer transactions, making the remittance process more accessible, especially in regions with limited banking infrastructure. With new crypto finance apps that offer much lower fees and instant transfers, the switch should be a no-brainer. Plus, blockchain technology provides a high level of security due to its immutable and transparent nature. Each transaction is recorded on a public ledger, reducing the risk of fraud.

Nevertheless, the crypto market is still challenged by its infancy, regulatory uncertainty, and technological barriers. Data research from Triple A shows that 72% of crypto owners are under the age of 34. Digital literacy and the availability of user-friendly platforms are crucial factors that influence the adoption of cryptocurrency-based remittance services.

The regulatory environment for cryptocurrencies varies significantly across different countries. In some regions, cryptocurrencies are embraced and regulated, while in others, they face stringent restrictions or outright bans. This regulatory uncertainty can hinder the widespread adoption of cryptocurrencies for remittances. While regulatory frameworks such as Market in Crypto-Assets (MiCA) aim to shed some light on crypto use and adoption, it's too early to draw definitive conclusions about the impact of MiCA. Brighty App’s MLRO, Roman Rašimas, shares that ‘its effectiveness will largely hinge on how rigorously it is enforced. MiCA will likely boost public confidence in crypto by signalling its move towards mainstream acceptance’, which could pave the way for wider adoption, particularly in remittance services.

Cryptocurrency payments have seen significant growth and adoption in recent years, transforming how transactions are conducted worldwide. As this space continues to evolve, we expect the use of stablecoins to grow, because they provide a reliable medium for everyday transactions and cross-border payments, as well as a way for novices to dip their toes into the crypto world. As adoption spreads, more businesses are expected to start accepting cryptocurrency payments.

We also expect crypto to continue being integrated into traditional financial systems, as well as apps and communication services, similar to Telegram’s Toncoin integration. Corporate adoption for payroll, supply chain payments, and other operational uses will also increase. Ultimately, the rise of crypto use and adoption will drive simpler remittance processes and a better experience for all parties involved.

About Nikolay Denisenko

Nikolay Denisenko serves as the Co-founder and Chief Technology Officer at Brighty App. Nikolay brings ten years of experience in applied mathematics, business process management, and developing applications. Before building Brighty, he was the lead backend engineer at Revolut.

About Brighty

Brighty is an all-in-one finance app that simplifies the way you manage your money and digital assets. With Brighty you can pay, send and receive money & crypto instantly, earn on your stablecoins and use crypto like fiat. The app is available for residents of the European Economic Area (EEA).