Bitcoin could soon come to the rescue of millions of Mexicans if the Trump administration’s proposed crackdown on remittances becomes law. Digital currency exchanges in Mexico are thriving and ever-increasing trade is being witnessed.
As early as May, the President-Elect’s campaign signaled its intention to stop more than six mln undocumented Mexicans in the U.S. from sending money home.
Informal economy for remittances
The remittance funds kept in the U.S., as Bloomberg points out, would be tantamount to making Mexico pay for Trump’s long-touted border wall.
“I would risk stuffing money in hidden places… because we have no choice,” one Mexican immigrant told the publication.
In the future, it is feared Trump’s government will make it illegal for remittance firms to serve Mexicans who cannot prove they are legally registered in the U.S.
Uncertainty about Trump’s next move is driving what is already a thriving black market for wealth transfer between the two economies. Goods are commonly transported on regular flights for a huge fee, and regulatory crackdowns on money exchange firms could quickly and dramatically increase such practices.
The move “would stimulate an informal economy for remittances,” Jesús Cervantes of the Center for Latin American Monetary Studies said.
BTC exchanges ride wave of enthusiasm
Bitcoin could thus emerge as an immediate solution to the crisis. Digital currency use is hardly scarce in Mexico, with exchanges thriving and ever-increasing trade being witnessed.
Nov. 8 “was our highest-volume day historically, with about $13.5 million [pesos] in purchases,” Pablo Gonzalez, CEO of local exchange Bitso, told PaymentsSource last week.
He suspects the rush was due to “panic” as the value of Mexico’s currency dropped by over 12 percent upon news that Trump had won the presidency.
Meanwhile, Bitcoin investment in Mexico is no different from the enthusiasm being seen further south, for example in many Latin American countries.
For instance, Bitso secured a $2.5 mln investment in January, tellingly enough from the US-based Digital Currency Group as well as domestic supporters.
The investment round marked the first time a Mexican financial institution had invested in the Bitcoin space.
“I feel this round has paved the way for other local banks to join the club,” Gonzalez said at the time.