As part of the show, I hosted a panel on Money20/20’s main stage with Denelle Dixon, CEO of Stellar, and Matt Oppenheimer, CEO of Remitly. Exploring whether crypto and digital currencies could render traditional remittances obsolete, it was a lively discussion with some real insights about where our industry is going.
Here are the main discussion points:
- Blockchain and crypto is already being used in remittances, particularly in cash-based economies to counter high inflation, poor financial technologies or government interference. It also has potential benefits on the treasury side, with Denelle highlighting how Stellar’s partnership with MoneyGram has enabled the provider to achieve instant settlement for the first time.
- However, the much-promised disruption isn’t developing as predicted. Blockchain is becoming another option for companies and consumers, not a replacement. Matt echoed this, saying that Remitly is thinking of stablecoins and crypto as another disbursement method. He also pointed to the need to solve on and off ramps, arguing that the most disruptive thing would be for crypto to create a ramp-free, single global digital currency.
- On the question of reducing costs, both Matt and Denelle argued that there are fixed costs that cannot be removed with crypto, such as KYC, AML and marketing. However, Denelle did argue that it could help hit the UN Sustainable Development Goal of 3% remittance costs.
- For many, trust remains a major issue. Remitly’s customers, for example, mostly view crypto as risky and are still getting comfortable with digital providers. However, Stellar is overcoming this by working with trusted local builders and focusing on service, not tech.
- Stablecoins are likely to be key here. Denelle argued that there was already “lots of momentum” for them, pointing to their role in helping users trust blockchain-based remittance services, and that they do not have the same regulatory restrictions as more volatile cryptocurrencies.
- Merchant adoption has room for growth. Denelle highlighted wage payments as an example, removing the friction of cashing cheques, as well as bill payments. However, Matt argued that this was a solution with benefits specific to some regions, and where most headwinds were related to trust or regulations. Merchant adoption is therefore likely to remain highly location-specific at present.
- In conclusion, digital currencies are very unlikely to make remittances obsolete any time soon. They have a role to play in the future of the industry, and have strong potential benefits for specific use cases but, as Matt said, the technology is a long way from disrupting remittances. For Denelle, the technology needs to be approached from the perspective of the problems it can solve – and that means working with policymakers, financial institutions and end users.