According to Reuters, El Salvador receives four times more remittances with bitcoin than a year ago. In May of this year, El Salvador received $1.7 million in remittances with Bitcoin.
Key facts
- March saw a spike with over $2.5 million in Bitcoin remittances.
- Remittances with Bitcoin still represent a small fraction of the total.
El Salvador receives four times more remittances with Bitcoin. Even before the approval of Bitcoin as a legal tender, El Salvador was already experiencing an increase in the flow of funds with the cryptocurrency through remittances sent by Salvadorans from other countries.
Between May 2020 and 2021, the amount of money coming from remittances with bitcoin quadrupled, according to a Reuters report published this Monday, June 14. Specifically, the information refers to transactions equivalent to less than $1,000 as remittances sent by Salvadorans to their nationals within the country.
Last year, during that month, the amount was about $424,000, while in May this year, there were more than $1.7 million in remittances using bitcoin received in the Central American country. The news agency, which had access to Chainalysis data, assured that there was a peak above 2.5 million dollars in March. However, it could not compare with the same month during the previous year since it did not have access to such data.
Despite the increase in the amounts coming from bitcoin, remittances with the cryptocurrency still represent a very low percentage compared to fiat money remittances.
The sharp increase in bitcoin transfers reflects trends in Central America […]. However, its minute use versus traditional remittances suggests that the cryptocurrency remains a niche tool for Salvadorans.
Reuters
Data from 2019 total remittances received in El Salvador at nearly $6 billion. However, this year’s high point of 2.5 million in March would be less than 0.1% of that total.
Bitcoin, legal tender in El Salvador
Just a week ago, the Assembly of El Salvador approved the Bitcoin Law, which gives legal tender status to the most important crypto-asset in the market. However, remittances have been on the rise before reaching that milestone.
Sending remittances with bitcoin speaks not only of Salvadoran’s use of the cryptocurrency but also of their fellow nationals who send money to the country, one of the 10 with the highest volume of incoming remittances globally.
Even so, the increase is striking, given the expectation that the adoption of BTC has unleashed, in addition to the creation of a mining center with volcanic energy and the offer of special conditions by President Nayib Bukele to investors interested in developing products associated with Bitcoin in El Salvador.
Researchers at Coin Metrics highlighted bitcoin as a use case for remittances in El Salvador in their most recent weekly report. In the Central American country, the firm estimates that 1 in 3 households receive money from outside the country.
Analysts believe remittance sending can improve “dramatically” in El Salvador using bitcoin, particularly with the Bitcoin Lightning Network, “rather than traditional money transfer infrastructure.” Local remittance companies have no intention of including cryptocurrency support for their value transfer systems.