Venezuelan Migrants Are Using Bitcoin for Remittances, But There’s a Catch

In 2018, Deimer González packed his college diploma, clothes and a mobile wallet with 1.5 BTC in savings and left Venezuela. What unfolded throughout 2019 offers a microcosm for Venezuelan bitcoin users around the world.

As a mechanical engineer from Caracas, formerly employed by Venezuela’s state-owned oil and natural gas company (PDVSA), González told CoinDesk that those very same savings allowed him to support his parents as he started to build a new life in Buenos Aires, Argentina.

“I was always able to send money back thanks to my savings, sparing my wages in pesos,” he said.

With an estimated $3.7 billion in remittances sent in 2019, money from abroad is an increasingly large source of income for Venezuelan families. As such, bitcoin and cryptocurrencies have assumed a larger role in facilitating cross-border transactions.

Additionally, migrants are using crypto during the relocation process itself, since it’s often hard for jobless immigrants to access financial services in their new countries.

Such is the case with Wolfang Barrios, a trader from Caracas who told CoinDesk about his experience arriving in Chile without savings in the local currency. Said Barrios:

“I didn’t have a stable job, enough money or a bank account. I could send the remittances only using crypto."

Plus, supporting a family in Venezuela isn’t easy, even with dollars. In May, Venezuelan economist Luis Oliveros placed the cost of living in the country as high as $900 a month for a family of five, with a basic food basket costing roughly $300 a month. For context, the minimum wage in Venezuela is currently equivalent to $15 a month, though economists suspect this rate won’t last long.

In González’s case, neither his prior $5 monthly wage as a PDVSA worker nor his bitcoin remittances alone offer enough to support his family.

“Now I send $50 [worth of bitcoin] and it’s still nothing,” he said, adding that both his parents currently must work to sustain themselves, without further plans to move out of Venezuela.

The remittance business

Perhaps because of all these challenges, crypto-remittance businesses could start to bloom in Venezuela.

One such entrepreneur, who asked to be identified only by his first name Jesús, works for the Peru-Venezuela remittance platform Local Remesas.

“We receive between $200,000 and $300,000 a month,” he said, explaining how the platform currently trades pesos for bitcoin, to be later exchanged for bolivares in Venezuela.

As it turns out, niche fiat-to-crypto payment processing is a lucrative business in Venezuela.

According to Peru’s Migrations and Immigrations Police, the country is the second choice for Venezuelan immigrants, with over 865,000 arrivals to date. Even Nicolás Maduro’s government recently launched its own remittances platform, which uses the blockchain-based Petro (PTR).

As for Jesús, he said the trick to exchanging at the best rate is to use direct contacts:

“LocalBitcoins is about 3 percent more expensive than using my own contacts."

Here’s the catch

However, for many of these bitcoin users, crypto payments are merely a last resort.

A daily inflation rate of 3 percent and the constant devaluation of the bolivar has made the exchange of bitcoin very useful for those living in Venezuela. But elsewhere in Latin America, some bitcoin users prefer to use fiat as soon as the situation is tenable.

Mariluna De La Concha, a Venezuelan crypto advocate living in México, told CoinDesk that she sent remittances in crypto to her family from 2016 until early 2019. Now she only sends pesos to her mother.

“It’s not convenient to exchange crypto,” she said. “In Venezuela it has good value due to inflation, but it’s very expensive for me from here.”

Her choice to use those expensive-but-compliant exchange platforms was also a matter of safety. Cases of fraud have been reported anonymously in Venezuelan private chats, where American bank accounts of Venezuelan users get reported and blocked after a transaction.

An anonymous source told CoinDesk there’s even the suspicion that exchange platforms’ transactions are being tracked by government police to extort bitcoin users.

For González, the mechanical engineer who fled in 2018, the situation has prompted him to switch to sending more fiat currency back home. Said González:

“I’m more of a [bitcoin] holder now."

Venezuelan Bolivar image via Shutterstock