As Venezuela recovers from one of the worst economic crises in its history, more families are turning to an unconventional lifeline: cryptocurrencies.
Written by Maria Paula Mijares Torres / Bloomberg.com
Remittances, or cash payments from family members living abroad, are traditionally sent through international banks or retail financial companies like Western Union or MoneyGram, and often come with high transaction fees of up to 7%. With the volatile bolivar and a number of government restrictions, and transfers taking up to three business days to complete, speed often gives cryptocurrencies an edge.
Over the past decade, Venezuela has become one of the South American countries that relies heavily on remittances. After the country’s staggering migration crisis, about 30% of Venezuelan households began receiving remittances, according to a study by the Inter-American Dialogue. The amount sent via cryptocurrency likely reached a record 9% of all money sent home last year, according to data from blockchain analytics firm Chainalogy.
More than 7.7 million migrants and refugees have fled Venezuela in the past decade, according to the Inter-Institutional Coordination Platform for Venezuelan Refugees and Migrants. To put that into perspective, 6 million have left Ukraine since 2022 and another 5 million have fled Syria since 2011.
In the past two years, the number of Venezuelan migrants in the United States has increased dramatically: nearly 300,000 migrants arrived in the United States last year.
Mass migration has affected US cities such as New York and Chicago, raising expectations that immigration could be a major deciding factor in the US presidential election.
The next step for many migrants after settling in is to help those they left behind. Last year, Venezuelans received more than $5.4 billion in remittances, representing at least 6% of GDP, according to the Inter-American Dialogue. That’s nearly 75% more than the amount sent in 2021. More than $461 million in remittances in 2023 were made through cryptocurrencies.
“The number of Venezuelan migrants sending remittances has increased by 50% to 60%,” said Manuel Orozco, director of the Migration, Remittances and Development Program at the Inter-American Dialogue. “It’s not a higher percentage because the rest of the migrants are still unable to send money.”
In Paula Moncrief’s case, one of her goals when she moved to the United States in 2018 was to find a job that would allow her to help her family at home. After settling in Austin, Texas, she started sending money via Zelle to an exchange known as the Exchange, but her preferred way to transfer money, especially to her younger, tech-savvy cousins, is through cryptocurrency. To do this, she bought Dogecoin memecoin on Coinbase, which has the lowest transfer fees she could find, compared to other cryptocurrencies or stablecoins that have higher fees on U.S. platforms.
In Venezuela, their cousins are using Binance to convert Dogecoin into Tether, a cryptocurrency that seeks to maintain a one-to-one relationship with the dollar. Once the money is converted into stablecoins, they can use it however they want: exchange it for bolivars or dollars, or spend it at one of the few businesses in the country that accept cryptocurrencies.
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