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Crypto exchange Coinbase is rolling out a new feature that could place it in competition with major players of the international money transfers industry such as Western Union. The company just launched a cash-out feature for users in Mexico allowing them to cash out the crypto sent to them in local currency.
“Coinbase has long presented a way to instantly send crypto (including stablecoins such as USDC) to family and friends anywhere in the world for free, and to allow recipients to invest in any of the 100+ cryptocurrencies that we support,” the company said in a blog post. “Today, we’re introducing the ability for recipients in Mexico to cash out their crypto holdings in their local currency.”
Users of the platform can instantly send crypto to recipients in Mexico using the Coinbase app. The recipient will receive a notification of the transaction and they can check the crypto balance of their Coinbase account.
If they want to withdraw in Mexican pesos, they can choose to cash out from their Coinbase crypto balance. The app will generate a redemption code that can be used to get cash at 37,000 convenience stores and physical retail outlets across Mexico.
They can also opt to just save the crypto in their Coinbase accounts. Alternatively, they can also convert and invest the crypto they receive in any of the more than 100 cryptocurrencies supported by the platform such as Bitcoin (BTC), Ether (ETH), and the stablecoin USDC, which will help them hedge against the devaluation of the local fiat.
“Coinbase customers in Mexico will be able to cash out their crypto using this new service free of charge through March 31, 2022,” the company added. “After that date, customers will be charged a nominal fee that’s still 25–50% cheaper than traditional cross-border payment solutions.”
According to World Bank data, U.S. immigrants and expats sent around $700 billion to their families and friends back in their home countries in 2020. However, Coinbase pointed out that traditional channels can charge hefty fees of up to 7 percent of the amount sent. Moreover, recipients usually only receive the funds in the local currency, which can suffer devaluation in high inflation locations.
The company hinted that it would launch the cash-out feature to other locations as well. “And while we’re starting in Mexico, over time we’ll consider other regions where customers face similar challenges,” the crypto exchange said. “We want to make it fast and easy for users to send crypto to anyone in the world, and allow recipients to participate in the cryptoeconomy.”
