El Salvador recently made headlines by becoming the first country to adopt bitcoin as legal tender, marking the start of an experiment amidst a global surge in cryptocurrency interest. The president of El Salvador, Nayib Bukele, believes this move would cause the amount of money that low-income families living in the country receive from remittances to 'increase in the equivalent of billions of dollars every year.'

Currently, less than 1% of the volume of global cross-border remittances is in crypto, but in the future, cryptocurrencies are expected to account for a larger slice of the more than $700 billion USD in global annual remittances. However, despite aspirational visions by El Salvador's president and various pundits, that future promise has not yet arrived due to two major hurdles:

First, from a consumer perspective, crypto transfers are still not cheaper, faster, or better today than alternative options, particularly considering the complexities of converting crypto to/from fiat currencies.

With respect to the cost to send money, sending remittances from the U.S. to El Salvador, an essential service for many, is very inexpensive - especially in comparison to current crypto exchange fees. In fact, when using MoneyGram to send $400 USD from the U.S. to El Salvador, our current pricing is as low as $0 when sent online from a bank account directly to a bank account. Alternatively, buying and selling crypto is currently a complicated and more expensive process. While the future possibilities of cryptocurrencies are technologically exciting, we must not dismiss the economic risks and challenges the people in countries like El Salvador face. According to the AP, remittances in El Salvador account for 23% percent of the country's gross domestic product and benefit about 360,000 households.

Further, most individuals today are not looking to move crypto as much as they're looking to hold crypto, and there are issues with interoperability between crypto and traditional fiat currencies in local markets. The system is currently not cost-effective when crypto is treated as fiat currency, because in order to buy the majority of goods and services with crypto, it typically must be converted back into fiat. This is tough for individuals who rely on remittances for quick access to funds, as most of the remittances that MoneyGram facilitates are spent almost immediately on necessities like food, shelter, education, and clothing.

Second, there are many regulatory barriers to overcome before this vision becomes a reality.

Around the world, particularly in the U.S., there is still widespread uncertainty around tax implications, SEC regulation, banking regulations, and more. Mexico, the largest receive market from the U.S., is a great example of a country that has gone in the opposite direction of El Salvador. Financial authorities in Mexico recently stated that crypto assets are not legal tender in the country and are not considered currencies under current laws, warning that financial institutions that operate with them are subject to sanctions.

Stablecoins, a way to tokenize fiat currency, are also gaining a reputation as a way to send crypto remittances while minimizing volatility risk. However, like most new technologies, they also have their fair share of obstacles to address.

To be a more effective form of cross-border payment flows, digital assets must overcome additional challenges including a lack of utility, expense of exchanges, complexity and volatility, continued speculative trading, limited on and off ramps to local fiat currencies, and more.

MoneyGram as part of the solution

At MoneyGram, we believe digital currencies can eventually streamline cross-border payments. In fact, we were the first company to utilize blockchain technology at scale for cross-border payments, we've launched innovative partnerships in the space, and we continue to invest in a number of crypto initiatives as we proactively prepare for the future. Given our expertise in cross-border payments, blockchain, and compliance, we are well-positioned to continue to help solve these challenges.

For example, while 80% of Americans are currently familiar with cryptocurrencies, less than 20% participate in the exchange of funds. To bridge this gap and make crypto more accessible, we've built a bridge to connect bitcoin and other digital currencies to local fiat currency.

Through our recent partnership with CoinMe, the largest licensed cryptocurrency cash exchange in the U.S., we're bringing bitcoin to thousands of new point-of-sale locations, an integration designed for customers who may be interested in utilizing bitcoin for the first time. Similarly, through our recent integration with G-Coin, we are providing consumers with a new way to access gold through a blockchain-based tokenized asset.

The evolution of technology in the blockchain world is significant, and we see blockchain, cryptocurrencies, stablecoins, and digitized assets as an additive strategy to what's already working at MoneyGram. From dollars to Euros to yen, our industry enables the transfer of hundreds of currencies from point A to B. In the end, crypto and digital currencies are just another input and output option for consumers. However, bitcoin alone will not resolve current economic challenges. In the meantime, MoneyGram will continue to ensure money makes it quickly, affordably, and safely back home - to El Salvador and beyond.

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