Why crypto remittance companies are flocking to Mexico

Mexico is the second-largest recipient of remittances in the world, according to 2021 World Bank statistics. Remittances to the nation jumped to a record $5.3 billion in July, which is a 16.5% increase year-over-year compared to the same period last year. The steady growth presents myriad opportunities for fintech companies.

Not surprisingly, droves of crypto companies are setting up shop in Mexico to claim a share of the burgeoning remittance market.

Over the past year alone, about half a dozen crypto giants, including Coinbase, have set up operations in the country.

In February, Coinbase unveiled a crypto transfer service tailored to United States-based clients looking to send crypto remittances to Mexico. The product enabled recipients in Mexico to withdraw their money in pesos.

Other companies have since joined the foray. In August, the Malaysia-based Belfrics digital currency exchange announced plans to open crypto transfer operations in Mexico. According to the published communique, the firm will start by launching blockchain wallet and remittance service solutions.

Another notable company that is jostling for a share of the Mexican crypto remittance market is Tether. In May, the crypto company launched the MXNT stablecoin, which is pegged to the Mexican peso. According to the enterprise, the collateralized digital currency will help customers to navigate volatility and use cryptocurrencies as a store of value.

Besides the new entrants, local Mexican crypto companies such as Bitso, which is one of the largest crypto exchanges in the Latin American nation, are already making moves to enhance their reach in an increasingly competitive market.

In November 2021, the Mexican firm established an alliance with U.S.-based Circle Solutions. The collaboration allowed the agency to use Circle’s payment system to facilitate U.S.-to-Mexico crypto remittances.

Cointelegraph had the opportunity to speak with Eduardo Cruz, head of business operations and enterprise solutions at Bitso, about the factors driving the crypto remittance trend in Mexico. He cited high bank transaction costs, slow settlement times and the lack of access to banking facilities as some of the factors pushing the masses toward crypto remittances.

He also highlighted recent alliances that have helped Mexican crypto companies bring crypto remittance services closer to nationals around the world, thereby boosting their adoption.

“For example, Bitso’s clients such as Africhange, which recently…