
Bitcoin is a valuable currency for remittance markets. However, that could be set to change as bitcoin regulation increases.
While bitcoin is proving to be a savvy investment opportunity inĀ financial capitals, it also offers value as an alternative form of currency in the developing world.
RemittanceĀ markets are beginning to adopt the digital currency as an alternative to traditional currencies with high transfer costs. However, some lawmakersĀ remain concerned about the currencyās impact on these developing markets.
Bitcoin important for developing nations
Bitcoin has strong ties to remittance markets, offering an unregulated alternative to the expensive, difficult and time-consumingĀ process of wiring money overseas.Ā The World Bank reportedĀ that Africans pay more than any other migrant group to transfer money back home,Ā and bitcoin companies are recognizing that issueĀ in this ever-growing market.
Michael Sonnenshein,Ā Grayscaleās director of sales and business development, spoke with the Investing News NetworkĀ about the importance of suchĀ developing bitcoin markets. Grayscale, who sponsors the Bitcoin Investment TrustĀ (OTCMKTS:GBTC), a publicly quoted security thatĀ is solely invested in bitcoin, commented, āI really ⦠see the use of bitcoin as a form of currency and a payment taking off dramaticallyĀ ā¦Ā in the developing world.ā
Bitcoin adoptionĀ linked to mobileĀ technology
SonnensheinĀ identified mobile technology as a key reason these emerging markets are embracing bitcoin as an alternative currency. He explainedĀ thatĀ āeven if the geographies and populations have the most basic of mobile cell phones, they have connectivity, and thatās all you really need to become part of the bitcoin ecosystem.ā
And indeed, cell phones have already had a major impact on the developing world.Ā According to Sonnenshein, āthere was never the capital or infrastructure for landlines in the developing world, but mobile phone technology came along,ā transforming the way people communicate.
Calls for increased regulation
However, some developing nations are wary of bitcoinās unregulated nature. CoinDesk statesĀ that the Central Bank of NigeriaĀ (CBN) is allegedly calling for bitcoin regulation due to fears of money laundering international penalties.
Obot Akpan, deputy director of theĀ financial policy and regulation department at the CBN, has stated that the āFinancial Action Task Force (FAFT) has observed that virtual currency payment products and services (VCPPS) present opportunity for money laundering and other crime risk that must be identified and mitigated. Virtual currencies present a wide range of issues and challenges that require financial authorities to consider and the challenges posed are unique and call for urgent regulator responses.ā It remains to be seen what these regulator responses will be, and how they will affect Nigeriaās bitcoin community.
All that said, despite uncertainty, bitcoinās role in remittance markets appears to be an incredibly promising, untapped opportunityĀ for digital currency enthusiasts.
Ā
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
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