Suspension of US remittances to Mexico could increase interest in Bitcoin.
US President-elect Donald Trump signed an ordinance this week authorizing the start of construction of the border wall with Mexico, fulfilling the promise he made during his presidential campaign, and began to suspend remittances to Mexico to help pay for the wall, this would make citizens more interested in the technology of digital currencies especially Bitcoin.
The wall along the 2,000-mile border is estimated to cost between $12 billion and $15 billion, according to Senate leader Mitch McConnell. However, deputy Director of the US Migration Policy Institute, Marc Rosenblum, estimates that the actual cost could exceed $25 billion. The U.S. government would also have to spend as much as $750 million a year to maintain the wall, many have said that the wall is impractical, expensive and ineffective for border control.
Some experts warn that Mexicans will find a way to get cash across the border without having to pay taxes on them if Trump’s proposed suspension of remittances is imposed. The head of Latin American research at Goldman Sachs, Alberto Ramos, said:
“If you tax that money it won’t necessarily stay in the U.S. It can still go to Mexico through informal channels. “
The World Bank recently stated personal remittances received in Mexico exceeded $26 billion in 2015. However, “the amount being sent through Bitcoin is negligible”, Tomas Alvarez Melis, CEO of Volabit, told Bitcoin.com. Volabit is a Mexican Bitcoin exchange and remittance service whose investors include Tim Draper and Barry Silbert.
Melis outlined a few conditions which could cause Mexican bitcoin remittances to surge.
Firstly, the tax on remittances would have to be large enough to compel people to switch to bitcoin. Secondly, there needs to be “a service or services geared towards this Hispanic population with a very simple and streamlined process for buying and remitting bitcoin.” These services must speak Spanish but should not require bank accounts or social security numbers to use. Thirdly, he said there needs to be “a way for these services to not be targeted by the regulators the same way Western Union would be targeted to enforce the new rules”.
Bitcoin startup Abra is getting ready to enter the space next month to provide peer-to-peer remittance services globally including to Mexico. People on both sides of Trump’s wall will be able to send and receive money instantly, privately, and securely using smartphones, without having a bank account.
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