Coinbase eyes challenge to Western Union with crypto remittances

[PORTLAND] Coinbase Global, the biggest US cryptocurrency exchange, is wading into the international money-transfer business, seeking to tap into a huge market dominated by firms like Western Union.

Coinbase said it has launched a free pilot programme for sending crypto funds to friends and family in Mexico. Receivers can convert the tokens into pesos at participating locations across the country or invest the funds into a Coinbase account. The service will become fee-based after Mar 31.

Coinbase didn't disclose the cost but said in a blog post it will be "still 25-50 per cent cheaper" than traditional cross-border transfers.

"We recognise this is a global issue. And while we're starting in Mexico, over time we'll consider other regions where customers face similar challenges," Coinbase said in the blog post.

The push into remittances is part of Coinbase's strategy to diversify its revenue amid a rocky period for cryptocurrencies that have sent trading volumes on exchanges plummeting. Coinbase is working to launch a marketplace for non-fungible tokens and is rolling out additional services in the area of decentralised finance.

The global-remittances market reached about US$700 billion in 2020 and is expected to grow to US$1.2 trillion by 2030, according to Allied Market Research.

Last year, Facebook's parent, Meta Platforms, began piloting a programme for sending remittances from the US to Guatemala using its cryptocurrency digital wallet.

For the Mexican venture, Coinbase said it partnered with Remitly, which has relationships with more than 37,000 retail outlets, including Bansefi, BanCoppel, Oxxo, Soriana and Telecomm Telegrafos. BLOOMBERG