The largest cryptocurrency exchange in the United States has entered into direct competition with Western Union and other cross-border money transfer companies, seeking to benefit from the vast international remittance market. Coinbase has announced the launch of a free pilot program for sending money via cryptocurrencies among individuals who have a friendship or familial relationship in Mexico.
The company enables cryptocurrency recipients to convert it to the local Mexican currency "peso" through its network throughout the country or invest the money in an account on the Coinbase platform. The service is set to launch in early April. Coinbase has not disclosed the cost but stated in a blog post on its website that it "will remain 25-50% cheaper" than traditional cross-border transfers.
In a statement, the company said, "We recognize that this is a global issue. As we launch in Mexico, we will look over time at other areas where customers face similar challenges." Coinbase is positioning money transfer operations as part of its expansion strategy to diversify revenue sources amid a difficult period for cryptocurrencies that has led to decreased trading volumes on exchanges.
On the other hand, Coinbase is also working on launching a marketplace for non-fungible tokens and additional services in the decentralized finance sector, according to Bloomberg, which was reviewed by Al Arabiya.net. The global remittance market was approximately $700 billion in 2020 and is expected to grow to $1.2 trillion by 2030, according to research firm Allied Market Research.
For the Mexico project, Coinbase has partnered with Remitly, which has connections with more than 37,000 retail outlets, including Bansefi, BanCoppel, Oxxo, Sorina, and Telecomm Telegrafos.
