More people in the UAE are opting to send money home using Bitcoin and stablecoins, despite the low adoption rate compared to traditional remittance methods. This trend is expected to grow in the coming years.
"More consumers are gradually adopting bitcoin and stablecoin for remittance purposes," said Ian Dillon, co-founder of NOW Money, a company that assists low-income migrant workers in sending money home. "The adoption rate is currently at 2 per cent, which is an improvement from the 0.5 per cent seen a few years ago. Over the next five years, it is projected to reach 10 per cent," he added.
Ian made these remarks during an interview with Khaleej Times on the sidelines of the Bitcoin Mena conference, which commenced in Abu Dhabi on Monday. The conference, which unites the global Bitcoin community, will explore the opportunities, challenges, and innovations within the ecosystem over two days.
Khurram Shroff, an early Bitcoin adopter and thought leader known as the 'Arab Whale' in the cryptocurrency community, explained the rising popularity of remitting through Bitcoin and stablecoins. "If someone leaves a money exchange with cash, they become a target," he said. "Transferring money digitally is safer for both the sender and the recipient, from a security standpoint. A significant amount of money is being transferred using USDT (Tether)."
Stablecoins are cryptocurrencies whose value is linked to another currency, commodity, or financial instrument, making them stable and popular for cross-border money transfers. USDT, or Tether, is a stablecoin pegged to the US dollar.
During a panel session, Michael Peterson, founder of Bitcoin Beach, cited the example of El Salvador, where cryptocurrency remittances have influenced financial institutions. "In El Salvador, we've observed that Western Union and MoneyGram have reduced their fees by up to 50 per cent because they recognize that they cannot compete with Bitcoin in the long run. In the short term, using Bitcoin for remittances may seem unsuccessful. However, in the long term, no one will be able to compete," he said.
According to Ian, one of the major obstacles to the adoption of stablecoins and bitcoin for remittances is the "trust factor," which he believes will take time to overcome. "For migrant workers in the UAE, they feel secure knowing they can visit a bank or pursue a person if there's an issue with a traditional transfer," he explained. "However, if digital money is sent and something goes wrong, how can they recover it? This is a significant factor holding them back."
In 2021, El Salvador became the first country to adopt bitcoin as legal tender. Despite this, Michael noted that 26 per cent of the country's GDP comes from remittances. "We underestimate how deeply ingrained people's personal habits are, especially when it comes to managing money. Even though it's easier and fees are lower, many people continue with what they know," he concluded.
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