And so even though trading revenue did go up, we didn’t grow as much as some of the international players,” Vogel said.īut there was a massive untapped market just begging for new players: remittances. You don’t have as much disposable income as places like the U.S. The year of speculation was 2017, with crypto market capitalization reaching $600 billion, and U.S.-based crypto exchange Coinbase becoming the #1 app on iTunes. “Transaction fees went through the roof, from costing a fraction of a penny to $20 or $30 on their Steam accounts, and that use case just disappeared,” Vogel said. The young gamers simply couldn’t afford it anymore. By the end of the year, bitcoin transaction fees also spiked, accounting for up to 40% of a single transaction. But all that went away the following year, when bitcoin’s value soared from $900 to $20,000 in a matter of months. In 2014, Bitso launched Mexico’s first bitcoin exchange.Īccording to Bitso co-founder and CEO Daniel Vogel, in 2016 Bitso grew thanks to young adult gamers in Mexico paying f or video games with bitcoin on the digital media platform Steam. “Internally, we can say that the use of cryptocurrencies is becoming more attractive compared to what other financial institutions offer,” Cadenas said. But the multibillion-dollar flow of remittances into the country, particularly from the U.S., and the difficulties involved in money transfers, have created a unique business opportunity for crypto platforms that promise to make transactions easier and cheaper. Like other countries, crypto is used primarily for speculation and trading in Mexico, Cadenas said. According to Cadenas, who is also pursuing a PhD in financial engineering, the combination of Mexico’s stringent new banking laws, expensive financial services and large unbanked population is driving public interest in cryptocurrencies. With the increasingly onerous banking requirements in Mexico, I am very tempted to use crypto, especially to buy things onlineĬrypto trading platforms can facilitate faster money transfers at a lower cost than banks. In August 2019, right before Bitso’s trade volume began its dramatic climb, the government began implementing new fintech laws that sought to govern financial service providers in the banking and private capital sectors, from entrepreneurs to crowdfunding institutions. But two years ago, Mexico decided to put substantial prevention methods in place. The country has long struggled with tax evasion and money laundering. In its effort to crack down on criminal activity, Mexico may have made simple transactions difficult for ordinary citizens as well. In Mexico, that is becoming increasingly hard to do. Sosa is drawn to crypto in part for its potential to transfer money more easily. Related: Bitcoin Entering 'New Adoption Cycle,' Coin Metrics Exec Says “It is truly shocking because we are seeing how only one cryptocurrency exchange has demonstrated greater potential than 35 dedicated investment management entities,” said Eloisa Cadenas, CEO of consulting firm CryptoFinTech and professor at the Mexican Stock Exchange Group. Earlier this year, Bitso announced it had surpassed 1 million users on its platform, of which 92% are Mexican.įor comparison, there are 35 traditional brokerages in the country with under 400,000 active trading accounts in total, according to Mexico’s financial authority, CNBV. In the eight months between September 2019 and May 2020, the trading volume of Mexico’s leading crypto exchange, Bitso, grew by 342%, according to the exchange. In a trend that is largely unnoticed outside of the country, Mexico is embracing cryptocurrency at a breakneck speed. Related: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China “With the increasingly onerous banking requirements in Mexico, I am very tempted to use crypto, especially to buy things online,” Sosa said. Now, his attitude toward crypto is changing, but not for the reasons you’d think. Even after they made good on their investments, Sosa kept his distance. Luis Sosa, 39, the creative director at a startup in Mexico City, watched with skepticism as his friends invested in bitcoin a decade ago.
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