Southeast Asia’s remittance sector finds a friend in crypto
In the west, speculators dominate crypto-currency trade; in Southeast Asia, where many people don't have bank accounts, their use is more practical
Bitcoin and crypto-currencies are still largely considered to be investment or speculation vehicles that can be manipulated by the rich and powerful, on Wall Street or elsewhere. It will only be when they become more practical to use in everyday life than the current system of money that cryptos might enter mainstream society. And in that regard, Southeast Asia could be leading the way.
As digital currencies become increasingly popular in the region, there are a number of emerging examples of how everyday life can be made much simpler with the use of crypto-currencies. The SCMP recently ran a report highlighting how a Cambodian-based company offering microloans has turned to crypto to power its app and facilitate financial transfers.
Phnom Penh based DApact utilizes digital tokens to provide transparency and an immutable record of transactions which, currently, traditional financial technology cannot do. Company co-founder Pierre-Marie Riviere said that the system is also popular with international aid agencies and lenders as it offers total control over the money lending process.
According to a 2016 study by global consulting and auditing agency, KPMG, 70% of people in Southeast Asia do not have a bank account. Other studies have revealed that Asians spend more time on their smartphones than those in the west. Digital currencies, therefore, are the obvious solution to marry banking and technology across the region.
In the Philippines a company called Coins launched an app a couple of years ago to facilitate transfers in the huge remittance service industry. By converting cash into crypto-currency before sending it home can result in huge savings from bank transfer fees and forex spreads or exchange providers such as Western Union.
Even one of the region’s poorest countries, Myanmar, has outpaced the likes of Germany in terms of fundraising for initial coin offerings (ICOs). Local startups have raised over $10 million in the country according to ICO Watchlist. Fintech startups across Southeast Asia are scrambling to get their apps and products out to populations hungry for cheaper and easier ways to move money around.
There is no doubt that existing interbank transfers are inherently expensive and slow. It can cost over $25 to send money from a European bank to an Asian one or vice versa. In addition to this is the foreign exchange rate that always favors the bank. Plus many nations, such as Thailand, have heavy restrictions on what funds can actually leave the country without first complying with a ream of paperwork.
Using the traditional methods of moving money is simply not practical or cost effective for the majority of those living in the region, especially in poorer nations. Far East Asia is already the leader in global crypto trading, housing four of the top five largest exchanges in the world. If the crypto revolution continues to pick up pace across the region, its increased daily uses and application could significantly improve the lives of those that embrace them.
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