Cryptocurrency remittances should have the attractiveness of cash without regulatory constraints.

According to Circle CEO Jeremy Allaire, digital cash systems built on blockchain must maintain fiat quality and be able to do so without regulatory constraints in order to attract more users from developing countries.

Allaire gave a panel discussion at the World Economic Forum’s annual meeting entitled “Remittances for Payback: A New Era of Digital Currencies”. Argument All the features that make physical cash an ideal medium for exchange. He said there’s a reason “cash is king”, citing fiat money’s role in portability, privacy and individual sovereignty.

“Cash is a really good commodity. […] People love cash. It is a private, secure and anonymous means and provides a final settlement between you and the other party.”

“There is a lot of energy in the world aimed at getting rid of the features that make cash so powerful. There is a reason why people in countries around the world prefer cash over mobile money. Because cash gives you more autonomy and more economic freedom.”

Allaire’s comment was in response to Asif Saleh’s observation that remittances via mobile wallets are limited by destination countries’ lack of adoption of digital technologies. Saleh is Managing Director of BRAC Bangladesh, a non-profit organization that aims to eradicate poverty.

“Many policy and regulatory issues that limit the power to move money have to do with depriving people of economic freedom,” Allaire said. “We need to think about how to solve these problems by building a model that actually provides a form of digital cash with features that make cash attractive to people.”

As simple as a SIM card, people all over the world can join the global internet. Allaire said that mobile ID should be able to integrate a digital wallet that allows people to send and receive cryptocurrencies like USD Coin (USDC).

“There are models that can do this. […] Policy makers and regulators need to adapt, rather than make everyone adapt to their constraints.”

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Remittances provide low-income countries with a relatively stable flow of capital as migrants send money home to their families. Remittances are estimated to account for around 4% of GDP in low-income countries and 1.5% of GDP in middle-income countries. Proponents of decentralized finance (DeFi) say it could cut remittance fees by billions of dollars a year.

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