Bitcoin enters overseas remittances space

Many Indian staff of foreign firms sending money home through cryptocurrency

Several Indian employees of overseas companies are bringing their money into India as bitcoin, a cost-free alternative to converting dollars into rupees. Overseas Indians are also repatriating money to their families in bitcoins.
 
Recipients of such remittances have a clear arbitrage opportunity because of the 5-10 per cent premium for bitcoins in India. Bitcoin arbitrage is big business in the US and China.
 
Unocoin, a large bitcoin exchange in India, has tied up with Bitwage, a blockchain-powered platform, to help overseas companies send money to India. Bitwage ties up with companies overseas to pay Indian employees and service providers in bitcoin using Unocoin’s API. Unocoin uses traditional bank routes to move funds to customer accounts.  
 
“The overseas employer is able to take advantage of the premium prices of bitcoin in India. Recipients receive their money without transaction costs or conversion fees,” said Sathvik Vishwanath, chief executive officer and founder of Unocoin. A few hundred Indian freelancers who earn in dollars are now Unocoin’s clients.
 

“India is the world’s largest inward remittance market at over $70 billion per year. The remittance business model involves setting up a payment channel from the country of origin to India. Most companies in this business are non-Indian companies like PayPal and Western Union,” pointed out Sandeep Goenka, co-founder, Zebpay. Transaction costs for converting dollars to rupees on PayPal are 6-7 per cent.
 
“Cryptocurrencies can significantly bring down transaction costs. Other countries, such as the Philippines, have recently allowed local companies to use bitcoin for remittances. Bitcoin can also add to India’s wealth of a fast growing global asset,” he added.
 
Bitcoin prices in India were quoting at a hefty 40 per cent premium a few days after last year’s demonetisation. Even 10 days ago, when bitcoin’s international price touched $11,000 for the first time, it was quoted at Rs 10 lakh in India, again at a 40 per cent premium.
 
Bitcoin provides an alternative to the traditional methods of sending money to India through the banking or hawala channels.
 
“I have seen instances where overseas employees send their earnings to families in India in bitcoin. But it is not a widespread phenomenon. Every time bitcoin prices in India are 15-20 per cent higher than in the US, people tend to use bitcoin,” said Vishal Gupta, chief executive officer and co-founder of SearchTrade.com, a search platform that allows its users to “own” keywords and earn in Bitcoin while searching on the Internet.
 
“Remittances in international business settlement are a larger application of Bitcoin, particularly in the context of transfer of data. Businesses buy and sell all kinds of information. Bitcoin is being used to trade such critical data,” he added.
 
“Of the total inflow of Bitcoin from overseas, 20 per cent may be remittances money. Indian professionals have started accepting fees in Bitcoin,” said Ashrith Govind, founder of a Bengaluru-based start-up WiLoop Networks.