Bitcoin start-ups in Asia take aim at remittances market

‘Bitcoin is so much better as a mechanism to send money around the world,’ said George Harrap, chief executive of Bitspark. (Reuters)
Updated 13 March 2018
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Bitcoin start-ups in Asia take aim at remittances market

HONG KONG/SEOUL: Bitcoin, battered by warnings about volatility and bubble-like appreciation, may have found a way to play a niche role in a big market: overseas money transfers.
Used as a transfer mechanism rather than a currency, bitcoin circumvents banks’ transaction fees.
Start-ups such as Bitspark in Hong Kong, and Bloom, Payphil, coins.ph and Satoshi Citadel Industries’ (SCI) remittance unit Rebit in Philippines, are trying to turn that into a business model.
Reduced liquidity on cryptocurrency exchanges and regulatory uncertainty are, for now, limiting monthly bitcoin-based remittances to millions of dollars in a multibillion-dollar market, the start-ups say. But if cryptocurrencies mature, they say, traditional businesses will be in for some serious disruption.
“Bitcoin is so much better as a mechanism to send money around the world,” said George Harrap, chief executive of Bitspark, a company that performs transfers for dozens of remittance shops in Hong Kong, Philippines, Indonesia, Vietnam, Pakistan, Nigeria and Ghana. “There’s a lot less overhead that you need to do.”
Many of the start-ups, such as Bitspark, do not deal directly with individual customers, but instead provide the “back end” transfer mechanism for remittance shops.
The businesses estimate how much money they will need for a day, buy bitcoin in advance and immediately sell it for the currency in the receiving country. That means they do not hold cryptocurrency for any meaningful length of time, and customers’ transactions are resolved in minutes, rather than days.
Kate Corporal, 28, a Filipino working at an international company in Incheon, South Korea, said she saved “huge” amounts sending money home using Rebit compared with traditional services.
“One thing I can guarantee is that the money I intended to send and the money that my family received was exactly the same,” Corporal said. “Using bitcoin is really helpful for many Filipinos ... as every single cent that we send can be very significant.”
Reduced demand for cryptocurrencies in smaller economies often means bitcoin prices are lower, so sending $100 to Indonesia or the Philippines via bitcoin results in the equivalent of more than $100 at the other end. Without the bank fees, the shops say they can charge their customers 25 to 75 percent less.
But the model has little to no advantage in markets with larger Filipino communities such as Hong Kong and Singapore, where competition is high and fees are low — roughly 1-2 percent, compared with 10-15 percent in South Korea.
Rebit sends money to Philippines mainly from South Korea, Japan and Canada and is looking to expand to the Middle East.
The giants Western Union and Moneygram, which dominate the current market, are testing Ripple’s XRP, a cryptocurrency smaller and more centralized than bitcoin.
But the industry’s transformation does not appear imminent.
The value of all bitcoin held globally is about $160 billion, roughly two-thirds of the Asian remittance market and a third of the global one, according to World Bank estimates. That means local cryptocurrency exchanges cannot cope with the cash flow needs of larger businesses.
“As soon as you’re doing $10-15 million a day, liquidity becomes an issue and you’re wondering, ‘how am I going to do this,’” said Prajit Nanu, chief executive and co-founder of InstaReM, which remits money to over 60 countries.
The start-ups avoid holding bitcoin for more than a few minutes because of its volatility.
Bitcoin now trades around $10,000, 10 times higher than a year ago, but half its December peak — a common swing for the emerging asset class.
“We started in 2014, when bitcoin crashed from $1,000 to $200-$300 and luckily our business model didn’t rely on speculation,” said SCI co-founder Miguel Cuneta.
“We are merely using it as a transfer mechanism,” he added. “We convert it as soon as possible.”
Cuneta says Rebit was only approved by Philippine’s central bank last year. South Korea’s backing away from banning cryptocurrency trading was encouraging, he said, but more clarity was needed in Seoul and elsewhere.
In Singapore, start-up Toast gave up using bitcoin for remittances so it could get licensed. It is now transferring money the traditional way but plans to offer loans and insurance using blockchain technology and smart contracts — a product offered by bitcoin’s main rival Ether and others.
“If you bought cryptocurrency as part of a money remittance mechanism it is very difficult to get your remittance license in Singapore or anywhere else because the regulators are still not sure how they are going to govern cryptocurrency,” said Aaron Siwoku, Toast’s founder.


India suspends Kashmir border trade with Pakistan

Updated 19 April 2019
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India suspends Kashmir border trade with Pakistan

  • Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries
  • India said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency”

NEW DELHI: India has suspended trade across its disputed Kashmir border with Pakistan, alleging that weapons and drugs are being smuggled across the route, as tensions simmer between the nuclear-armed neighbors.
Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries and brought the two countries to the brink of war with cross-border air strikes.
On Thursday, India’s government, which is in the middle of a tough national election, said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.”
It also said many of those trading across the Line of Control, which divides Kashmir into zones under Indian and Pakistani control, had links to militant organizations.
The home ministry said trade would be suspended until a stricter inspection mechanism is in place.
The cross-border trade is based on a barter system, with traders exchanging goods including chillies, cumin, mango and dried fruit.
It began in 2008 as a way to improve strained relations between New Delhi and Islamabad, who have fought two of their three wars over the disputed region.
The Indian Express newspaper said Friday that 35 trucks carrying fruit traveling from the Indian side of the border had been stopped after the government order.
Trade on the border has been suspended before, including in 2015, when India accused a Pakistani driver of drug trafficking.
The latest move comes after India withdrew “Most Favoured Nation Status” — covering trade links — from Pakistan after the February attack, which was claimed by the Pakistan-based Jaish-e-Mohammed Islamist group.
Islamabad has denied any involvement in the attack.
India’s Hindu nationalist Prime Minister Narendra Modi has made national security a key plank of his re-election campaign, pointing to the recent flare-up of violence as he battles the center-left opposition Congress party.
He is seeking a second term from the country’s 900 million voters in the mammoth election which kicked off on April 11 and runs till May 19. The results will be out on May 23.