Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / Why Stablecoins Are Winning the Remittance Wars
Transcript
- Lucas: So here's a number that stopped me this morning: the average cost of sending two hundred dollars across borders right now is six point three percent. That's according to the World Bank. Six dollars and thirty cents on a two hundred dollar transfer. Luna: And that's actually down from where it was a decade ago. It used to be closer to eight or nine percent. Lucas: Right, it's been slowly falling. But the reason I bring it up — and what I think is actually the most under-covered story in crypto right now — is that stablecoins have quietly pushed that number below one percent for certain corridors. We're talking about USDC and USDT moving across Solana or BNB Chain for fractions of a penny. Luna: And it's not just theoretical. I was looking at a report from Chainalysis from last month — the sub-Saharan Africa corridor alone saw stablecoin transfers grow forty percent year-over-year. That's real people sending money home. Lucas: Exactly. And the incumbent players — Western Union, MoneyGram, the traditional bank wire systems — they have not been able to match that price drop. Their cost structure is built on physical locations, compliance overhead, and correspondent banking fees that just don't compress the same way digital rails can. Luna: But there's always been this 'yeah, but' with crypto remittances — the volatility risk, the user experience, the need for both sender and receiver to be crypto-literate. Has that changed? Lucas: It has, and I think the key shift is stablecoins themselves. Five years ago, if you sent Bitcoin as a remittance, the value could swing five percent before the transaction even confirmed. That's a terrible user experience. But USDC is a dollar. The receiver gets a dollar, they can hold it as a dollar, or cash out through a local on-ramp. The volatility problem is basically solved. Luna: And the on-ramps have gotten way better. In Nigeria, you can cash out USDT to naira through P2P platforms in minutes. In the Philippines, there are now mobile wallets that handle the conversion automatically. Lucas: Right. So the user experience gap is narrowing fast. And the cost advantage is now so large that it's starting to overcome the inertia. Let me give you a specific comparison. Send two hundred dollars from the US to Mexico using Western Union — you're paying about twelve dollars in fees plus a bad exchange rate spread. That's roughly six percent. Send it as USDC on Solana — the transaction fee is about a tenth of a cent. Then the receiver uses a local exchange to convert to pesos. Total cost: maybe one percent, mostly from the spread on the exchange. Luna: So the question becomes: why isn't everyone doing this? What's the bottleneck? Lucas: Regulation, honestly. And trust. The legacy providers have decades of brand trust and regulatory approval. Western Union is licensed in over two hundred countries. Stablecoin issuers like Circle and Tether have to navigate a patchwork of rules. Some countries have banned or restricted crypto exchanges entirely. But that's changing. The EU's MiCA framework, which came into full effect last year, gave stablecoins a clear legal status. That's huge for adoption in Europe and for corridors into Africa. Luna: And the US? We've had the stablecoin bill in committee for a while now. Lucas: Yeah, it's stalled. But interestingly, that hasn't stopped dollar-pegged stablecoins from growing. In fact, the total market cap of stablecoins just hit one hundred and eighty billion dollars — that's up from about one thirty a year ago. And most of that is USDC and USDT, both dollar-pegged. So the market is voting with its feet. Luna: There's an argument that this is actually good for the dollar's global role — that stablecoins are extending dollar dominance digitally, without the US government having to do anything. Lucas: That's a fascinating point and I think it's underappreciated. When someone in Kenya holds USDC, they are effectively holding a digital dollar. That's dollarization happening through private markets. The Fed might not love it from a monetary policy perspective, but from a geopolitical standpoint, it's hard to argue against. Luna: But let's be real — the average person sending money home is not thinking about geopolitics. They just want the money to arrive quickly and cheaply. And stablecoins now deliver that. I want to ask about the volume data. You mentioned earlier that stablecoin transaction volume has exceeded Visa. Can you unpack that? Lucas: Sure. So Visa processes about twelve trillion dollars in transactions annually. Stablecoin on-chain settlement volume — so actual transfers of USDC and USDT on blockchains — hit about fifteen trillion on an annualized basis in the first quarter of this year. That's not retail spending; a lot of that is institutional wholesale transfers, trading, and DeFi. But the raw number shows that the infrastructure can handle huge volumes. Luna: And the remittance piece is still a small fraction of that. But it's the most impactful fraction for real people. Lucas: Absolutely. The World Bank estimates that about eight hundred billion dollars flows through formal remittance channels each year. And that's just the formal ones — the informal channels, like cash carried across borders or hawala networks, are probably another couple hundred billion. If stablecoins capture even ten percent of that, that's eighty billion dollars moving on-chain. That changes the economics of blockchains themselves. Luna: And it changes the incentive for miners and validators. Transaction fees from remittances could become a meaningful revenue stream for networks like Solana or the Lightning Network on Bitcoin. Lucas: Right. And that brings us back to the price action we're seeing this week. Bitcoin is at sixty thousand two hundred and thirty four, down almost six percent in five days. Ether at fifteen seventy one, down nine percent. But look at Solana — down only two point two percent over the same period. Part of that resilience, I think, is because Solana is the chain of choice for these micropayment use cases. It's fast, cheap, and has a growing ecosystem of remittance-focused apps. Luna: So the market is starting to price in real utility. That's a shift from the narrative-driven cycles of 2021 and 2024, where everything moved on hype. Lucas: Yeah, and that's healthy. It's also why we're seeing the divergence between Bitcoin and altcoins narrow for some projects — the ones with actual usage are holding up better. But I want to be careful not to overstate this. The remittance use case is real but still early. The infrastructure is there, but user adoption takes time. Most people still go to Western Union because they know how it works. Luna: Speaking of which — I was reading that Western Union is actually experimenting with stablecoin settlements on the back end. They're not advertising it, but they're testing USDC for interbank transfers. Lucas: That's the classic 'if you can't beat 'em, join 'em' strategy. And honestly, it's smart. The rails are better. Why not use them? But it also validates the technology. If Western Union — the incumbent — starts using stablecoins internally, that's a massive signal that the cost and speed advantages are real. Luna: It also raises an interesting question: if the incumbents adopt the same technology, what's the advantage of a pure crypto-native remittance app? Lucas: Distribution and user experience, mostly. The crypto-native apps like Yellow Card in Africa or BitPesa have built onboarding flows that work for people without bank accounts. They're not just copying the old model — they're building for the unbanked. And that's a huge market. About one point four billion adults globally are unbanked, but two thirds of them have a mobile phone. That's the sweet spot. Luna: So the technology is ready, the market is huge, and the cost advantage is undeniable. The only missing piece is regulation and user education. Lucas: Yeah. And that's where shows like this one come in — not to shill, but to actually explain how these things work so people can make informed decisions. And honestly, we're only able to do that because of listeners like you. If walking through the economy with us has made something click — if you've ever saved money on a transfer or understood a trend a little earlier — that's exactly why we do this. Luna: And it's why listener support matters. A couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: It's ad-free, it's independent, and it's because of you. So thank you. And now back to the data — because we haven't even touched on what the Fed's flat interest rate environment means for stablecoin yield products. Luna: Right. The Fed funds rate is at three point six three percent, and it's been flat for a while. That means yields on stablecoin lending protocols are also compressed. But that actually might be good for remittances — lower yields mean lower opportunity cost of holding stablecoins for daily use. Lucas: Exactly. When DeFi yields were double digits, people had an incentive to hold stablecoins as investments, not as transaction tools. Now, with yields lower, the use case as a medium of exchange becomes more attractive. That's a subtle but important dynamic. Luna: So we might be entering a phase where stablecoins are used more for payments and less for speculation. That would be a huge milestone. Lucas: It would. And if that happens, the remittance market is just the beginning. Think about payroll, B2B payments, even government disbursements. The rails are already built — it's just a matter of adoption.