To El Salvador and back: Is there a crypto use case for cross-border payments?

Governments across the world have been looking into cryptocurrency for years now (whether the consensus is to adopt, or ban remains to be seen), but this has been an especially hot topic recently as crypto moves into the limelight in more countries.

For example, El Salvador made headlines back in June by becoming the first country to adopt bitcoin as legal tender. Mexico is a great example of a country that has gone in the opposite direction of El Salvador, with financial authorities stating that crypto assets are not legal tender in the country, and any financial institutions operating with them are subject to sanctions. China also recently put limits on cryptocurrencies.

With buzzwords like stablecoin, NFTs and digital tokens becoming more mainstream, consumers around the world are left wondering: Is there really a new form of money? And for those who are reliant on cross-border payments: Is there actually a better way to send money home to loved ones?

In short, the answer is no; the slightly longer answer is not yet. Despite aspirational visions, that use case has not yet arrived due to a few major hurdles:

First, crypto transfers are still not yet cheaper, faster, or better than the alternative remittance options for consumers, specifically due to the complexities and volatility of converting crypto to/from fiat currencies.

Sending remittances from the U.S. to El Salvador, an essential service for many, is very inexpensive if you are working with the right partner. In fact, when using MoneyGram to send $400 USD from the U.S. to El Salvador, our current pricing is as low as $0 when sent online from a bank account directly to a bank account. Fees vary by platform, but I can guarantee there are cheaper options for cross-border transfers than using crypto, particularly when you consider added fees for cryptocurrency exchange.

Second, there are many regulatory barriers to overcome before this vision becomes a reality, particularly in the U.S. (one of the largest outbound cross-border payment sources in the world). There is still widespread uncertainty around tax implications, SEC regulations, banking regulations and more. As remittances in El Salvador account for 23% percent of the country’s gross domestic product and benefit approximately 360,000 households, the flow of dollars (El Salvador’s other legal tender) coming from the U.S. is not switching to crypto anytime soon amid all this regulatory uncertainty.

Third, there are issues with interoperability between crypto and traditional fiat currencies in local markets. The system is currently not cost-effective when crypto is treated as fiat currency, because in order to buy goods and services with crypto, it must be converted into fiat, which is time-consuming and leaves consumers at risk of volatility in crypto’s value. This makes it tough for individuals who rely on remittances to quickly access funds, as most of the money received via remittances is spent almost immediately on necessities like food, shelter, education and clothing.


MoneyGram was the first company to utilize blockchain technology at scale for cross-border payments, we’ve launched innovative partnerships in the space, and we continue to invest in a number of crypto initiatives as we proactively prepare for the future. We recently announced a partnership with Stellar Development Foundation that enables digital wallets connected to the Stellar network to access MoneyGram’s global retail platform, providing a bridge between digital assets and local currencies for consumers. This partnership helps solves one of the biggest problems with cryptocurrency, its utility beyond being an asset of stored value.

Given our expertise in cross-border payments, blockchain, and compliance, we are well-positioned to continue to help solve these challenges. In the short-term, MoneyGram is focused on building that bridge for consumers and enabling interoperability of crypto and digital currency transfers. And in the longer-term, we’re optimistic about the potential of cryptocurrencies for remittances.


By Alex Holmes, CEO, MoneyGram

0 0 votes
Article Rating
Notify of

Inline Feedbacks
View all comments