Crypto could eliminate 97% of traditional transfer fees: Coinbase

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A recent blog post from cryptocurrency exchange Coinbase indicates that the vast majority of US remittance fees for international transfers would not apply to similar transactions made using cryptocurrency. cash.

According to exchange research, the average fee rate in the United States of 6.18% means the average annual spending by Americans is likely close to $12 billion in remittance fees. The post goes on to say that the average transaction time for these remittances ranges from one to 10 days, while similar cryptocurrency transactions typically take around 10 minutes.

Remittances represent a kind of double whammy for international transactions because, usually, they require both sending fees and conversion fees to exchange between currencies.

Cryptocurrency transactions, however, tend to cost significantly less. According to Coinbase, Bitcoin (BTC) transaction fees average around $1.50 and Ether (ETH) averages $0.75. These fees are potentially much lower than traditional remittance fees, which the World Bank says average 6.3%. According to Coinbases estimates, sending money via BTC and ETH is 96.7% cheaper than traditional money transfer methods.

Although the report does not appear to have the rigor of a scientific study, it sheds light on some of the difficulties faced by the more than one billion people who depend on remittances and how the global adoption of cryptocurrency could changing the financial landscape. US senders, for example, were responsible for 94.9% of all remittances sent to Mexico in 2022, according to the Wilson Center, a Washington-based research institute.

Related: 9 years after the first Bitcoin ATM, there are now 38,804 worldwide

It is estimated that around 6% of US adults currently hold some form of cryptocurrency, with adoption rates continuing to rise since at least 2019, barring two quarters of slowdown at the end of 2022. While these rates may increase or maintain the status quo, a gradual exodus from traditional remittances to international cryptocurrency-based transactions could eventually disrupt how the global financial industry handles associated fees.

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