News
Cryptocurrency Remittances in Venezuela Skyrocket as Migration Crisis Worsens
Maria Paula Mijares Torres | Bloomberg
As Venezuela recovers from one of the most severe economic crises in its history, more and more families are turning to an unconventional lifeline: cryptocurrency.
Remittances, or cash payments from relatives living abroad, are traditionally sent through international banks or retail financial services like Western Union or MoneyGram, often burdened with high transaction fees of up to 7%. With the bolivar’s volatility and a host of government restrictions, and transfers taking up to three business days to complete, speed often gives cryptocurrencies the upper hand.
Over the past decade, Venezuela has become one of the top remittance-dependent nations in South America. After the country’s skyrocketing migration crisis, about 30% of Venezuelan households began receiving remittances, according to a study by the Inter-American Dialogue. The amount sent via cryptocurrency likely reached a record 9% of all money sent home last year, according to data from blockchain analytics firm Chainalysis.
More than 7.7 million migrants and refugees have fled Venezuela in the past decade, according to the Inter-Agency Coordination Platform for Refugees and Migrants from Venezuela. To put things in perspective, 6 million people have left Ukraine since 2022, and another 5 million have fled Syria since 2011.
Over the past two years, the Venezuelan immigrant population has grown exponentially, with nearly 300,000 arriving in the United States last year. The exodus has weighed on U.S. cities like New York and Chicago, adding to expectations that immigration could be a major deciding factor in the U.S. presidential election.
The next step for many migrants after settling in is helping those they left behind. Last year, Venezuelans received more than $5.4 billion in remittances, which makes up at least 6% of the gross domestic product, according to the Inter-American Dialogue. That’s nearly 75% more than the amount sent in 2021. More than $461 million of remittances in 2023 were sent via cryptocurrency.
“The number of Venezuelan migrants sending remittances has increased by 50 to 60 percent,” said Manuel Orozco, director of the Migration, Remittances, and Development program at the Inter-American Dialogue. “It’s not a higher percentage because the rest of the migrants still can’t afford to send money.”
In the case of Paola Moncrieff, one of her goals when she moved to the United States in 2018 was to find a job that would allow her to help her relatives back home. After settling in Austin, Texas, she began sending money through Zelle to a money changer known as a cambista, but her favorite way to transfer funds, especially to her younger, more tech-savvy cousins, is through cryptocurrency. To do so, she buys the memecoin Dogecoin on Coinbase, which has the lowest transfer fees she’s found, compared to other cryptocurrencies or stablecoins that have higher fees on U.S. platforms.
In Venezuela, his cousins use Binance to transfer Dogecoin into Tether, a cryptocurrency that attempts to maintain a one-to-one relationship with the dollar. Once the money is in the stablecoin, they can use it however they want: convert it into bolivars or dollars, or spend it at one of the few businesses in the country that accept cryptocurrency.
“Before, I could only rely on my money changer and it was really hard when she didn’t have bolivars, but now this way through cryptocurrency has solved a lot of my problems,” said Moncrieff, who learned how to do it thanks to her cousin’s husband who started playing NFT games during the pandemic. “If I need to give money to my aunt or grandmother quickly for an emergency and I know my money changer doesn’t have the money, I ask my cousin to help me by giving them cryptocurrency and they deposit the money into her account.”
While cryptocurrencies are an attractive option in the remittance landscape in Venezuela, this method of sending or receiving funds is fraught with risks.
Cryptocurrency prices are notoriously prone to wild fluctuations, meaning the amount received can vary significantly from the amount sent. Regulatory uncertainties add an additional layer of risk.
Peer-to-peer platforms have become popular among Venezuelans looking to convert cryptocurrency funds received in bolivars. They have the ability to exchange cryptocurrencies at market rates, often bypassing official exchange controls. And despite Binance’s U.S. regulatory woes, it remains the most popular exchange site for Venezuelans and migrants in many parts of the world.
“You don’t know who you’re talking to when you do peer-to-peer trading,” said Enrique De Los Ríos, a cryptocurrency consultant in Venezuela. “They could give you counterfeit bills, they could give you money they used to sell a stolen car or commit other crimes, there’s no entity you can get back from.”
This mass migration comes in the wake of a severe economic collapse, characterized by uncontrolled inflation and widespread shortages of food and medicine.
That’s what prompted Carlos Espinoza to move to Argentina in 2018. Espinoza, whose name has been changed for his family’s safety, had been using cryptocurrency for many years before migrating. He now sends remittances by buying Tether on Binance and depositing it in bolivars into his bank account in Venezuela, which his parents have access to.
“This is the easiest way I’ve found to send money to my family and also save money in another currency that’s been hit by hyperinflation,” Espinoza said. “My current job fortunately pays me in dollars, but when I was making a living in Argentine pesos, I transferred them to cryptocurrencies so they wouldn’t lose value.”