A rising number of UAE-based migrants are using cryptocurrency and blockchain services to send remittances fast and cheaply, so he recently moved to an app that allows him to do so with zero transfer fees.
According to blockchain data company Chainalysis, the Middle East and North Africa had the fastest-growing crypto market in the world in 2018, with crypto transactions into the region increasing by 48% to $566 billion in the year to June.
It went on to say that the region’s development was aided by the usage of cryptocurrency for remittances and savings and by increasingly liberal legislation. The United Arab Emirates (UAE) has built legal and regulatory frameworks for digital assets in an effort to position Dubai as the industry’s global epicentre.
CEO Antti Arponen reported that 5 million users had downloaded the Pyypl app since its release in 2017. The company is situated in Dubai. “Eighty percent of our users are migrants, and the number has been growing exponentially in recent years,” he said to the Thomson Reuters Foundation.
Despite the market crisis last year that left many holders of digital coins nursing severe losses, migrant workers said cryptocurrency offered a better deal than traditional banking and money transfer services.
However, Pete Howson, a crypto specialist and assistant professor in international development at Northumbria University in Newcastle, United Kingdom, warned that such platforms put consumers at danger of scams and highly volatile currencies. He argued that unlike traditional banking, “users’ funds aren’t insured when using these sorts of platforms” (crypto and blockchain-based apps).
UAE Immigrants are on the lookout for prosperity.
According to a report by the UN Capital Development Fund from last year, about 90% of the UAE’s 9.3-million people are migrants, with many coming from countries like India, Pakistan, Bangladesh, Indonesia, and Egypt. They send home billions of dollars each year, but most are unskilled labourers who don’t make at least 5,000 dirham ($1,350) per month, the threshold for opening a bank account in the UAE.
According to Mohammad Jalal Uddin Sikder, coordinator of the Centre for Migration Studies in Bangladesh and a scholar specialising in labour migration, migrants frequently use cash transfer services because of their low cost.
Migrants think about their finances very seriously. There are steep fees associated with using a bank to send money abroad. The standard fee for sending money abroad using a UAE money transfer provider is 25 dirham. However, cryptocurrencies can be an even better deal because they facilitate “peer-to-peer” exchanges between individuals online without the need for intermediaries like banks or monetary authorities.
Migrants can send cryptocurrency they’ve purchased with a credit card or at a cryptocurrency exchange straight to their loved ones’ digital wallets. After that, their family members will need to exchange the cryptocurrency for fiat money. Depending on the app and the destination country, transfer fees can be as low as 0.5 percent. Currency conversion is usually charged at a rate of a few percent, while some services charge as low as one penny.
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