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More UAE residents remitting using Bitcoin, other cryptocurrency

One of the biggest challenges that may prevent adoption of stablecoin and bitcoin for remittances is the 'trust factor', according to an industry insider

Published: Mon 9 Dec 2024, 10:52 PM

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Photo: AFP File

Photo: AFP File

More people in the UAE are choosing to send money home using Bitcoin and stablecoins. Although the adoption percentage is low as compared to traditional remittance methods, it is expected to rise in the coming years.

“More consumers are slowly beginning to adopt bitcoin and stablecoin to remit money,” said Ian Dillon, who, in 2017, co-founded NOW Money, a company that helped low-income migrant workers to remit money home. “The adoption rate is only 2 per cent but that is still higher than the rate a few years ago when it was only 0.5 per cent. In the coming five years or so, it will rise to 10 per cent,” he said.

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Ian was speaking to Khaleej Times on the sidelines of the Bitcoin Mena conference that began in Abu Dhabi on Monday. The event, which brings together the global Bitcoin community, will see participants will delve into the opportunity, challenges, and innovations facing the ecosystem in this region over two days.

Early Bitcoin adopter and thought leader Khurram Shroff more popularly known as the ‘Arab Whale’ in the cryptocurrency community explained why remitting through Bitcoin and stablecoin was gaining popularity. “If a person comes out of a money exchange with cash, he is a target,” he said. “So transferring the money digitally is safer for the person receiving it and the person sending it, from a security perspective. So there is a lot of money transfer happening in USDT (Tether).”

Stablecoins are cryptocurrencies whose value is pegged, or tied, to that of another currency, commodity, or financial instrument. Their stability make them popular choices for institutions and people to transfer money across borders. USDT, or Tether, is a stablecoin pegged to the US dollar.

During a panel session, Michael Peterson, founder of Bitcoin Beach, shared the example of El Salvador where remitting in cryptocurrency impacted financial institutions. “In El Salvador, what we have seen is that it has caused Western Union and MoneyGram to drop their fees by up to 50 per cent because they know that in the long term, they're not going to be able to compete with Bitcoin. In the short term, it seems like using Bitcoin for remittances is a failure. But in the long term, I don't think anybody's going to be able to compete.”

According to Ian, one of the biggest challenges that prevents the adoption of stablecoin and bitcoin for remittances is the “trust factor” and he thinks it could take a long time for people to overcome.

“For migrant workers in the UAE, they feel like if they send money to a bank they can walk into an institute or chase a person if there is a problem,” he said. “However, if you send digital money and something goes wrong, how will they retrieve it. That is one major factor that holds them back.”

In 2021, El Salvador became the first country in the world to use bitcoin as legal tender. Despite this, Michael said that 26 per cent of the country’s GDP comes from remittances. “We underestimate how entrenched people get in their personal habits, especially when it comes to how they deal with money. So even though it's easier and the fees are lower, a lot of times, people will continue with what they know.”

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