When 26-year-old Brazilian entrepreneur Erica M moved to the UAE in 2023, she tried the usual routes to making overseas payments: bank transfers, online remittance services, and the money-transfer businesses at malls nationwide. None of them suited her needs, she says, because they were either too inconvenient, took too long, or were simply too costly.

Instead, she turned to cryptocurrency. “Crypto became the best option for me. I can send the money from my phone.”

Erica now transfers about $1,000 monthly via Tether (USDT), a cryptocurrency known as a stablecoin. She is one of a growing number of expatriates and migrant workers in the region who are experimenting with digital tokens to make remittance payments, drawn by their speed and efficiency. 

Traditional systems often charge hefty fees for even the smallest transfers. For migrant workers living paycheck to paycheck, this can significantly reduce the amount of money they can send home.

“For these communities, crypto provides a swift alternative to traditional remittance methods,” says Vivien Lin, Chief Product Officer of the cryptocurrency exchange BingX.

According to the GCC Statistical Centre, foreign workers from GCC nations remitted $131.5 billion in 2023, the last full year for which data is available. 

“Given the MENA region’s large expatriate population and high remittance volumes, crypto solutions have a significant opportunity to make a mark. “The potential market for crypto remittances is substantial,” says Vugar Usi Zade, Chief Operating Officer at cryptocurrency exchange Bitget. 

“Sending money via cryptocurrencies offers several advantages: faster transaction times, lower fees, and increased accessibility, especially for those without traditional banking services. This can make a real difference for individuals looking to send smaller amounts more frequently,” he adds.

Raphael Auer, Ulf Lewrick, and Jan Paulick wrote in a Bank of International Settlements (BIS) working paper that mapping how cryptocurrencies and remittances flow between countries is challenging. 

Nevertheless, the BIS research shows that volumes are growing. Cross-border crypto asset flows—including financial transactions beyond remittances—jumped from less than $7 billion in the first quarter of 2017 to $600 billion at the end of 2024’s second quarter. 

SURGE IN STABLECOIN LAUNCHES

Stablecoins account for nearly half of total cross-border volumes. Designed to behave more like traditional fiat currencies, stablecoins can be easily integrated into existing financial systems. That’s why many central banks and large financial institutions want to use stablecoins to enhance liquidity, improve the speed of payments, and offer digital versions of national currencies. 

In December, the UAE introduced a dirham-backed stablecoin, AE Coin, following the launch of the Digital Dirham in 2023. Last month, Abu Dhabi sovereign wealth fund ADQ, conglomerate IHC, and the lender First Abu Dhabi Bank (FAB) announced plans for a new stablecoin backed by dirhams, while UAE-based ruya became the first Islamic bank to allow customers to buy and sell virtual assets through its mobile app.

Christoph Koster, CEO of ruya, says it is “actively testing stablecoin-based remittance solutions with its partners to simplify, secure, and accelerate cross-border flows.”

He adds: “Crypto, especially stablecoins, are transforming remittances by enabling near-instant, low-cost transfers (fees as low as 0.5–3% vs 6.35% for traditional channels).”

The MENA region only accounts for about 7.5% of the world’s cryptocurrency transaction volume, but virtual assets could soon become a greater part of everyday life. 

Chainalysis reports that 93% of stablecoin transfers in the UAE are retail-sized, which refers to transactions under $1 million. Arushi Goel, Head of Policy – Middle East & Africa at Chainalysis, indicates that everyday use rather than speculation. 

“One of the most immediate and impactful applications is remittances,” Goel says. “Unlike Bitcoin, stablecoins are pegged to fiat currencies or liquid assets like US treasuries or gold, making them ideal for everyday transactions. And because the UAE dirham is pegged to the US dollar, stablecoins such as those backed by the USD, which accounts for 61% of stablecoin activity in the UAE, offer a seamless entry point into the digital asset space.”

Chainalysis data shows that stablecoins account for the largest volume of crypto inflows in the UAE (51.3%), outpacing the global average (44.7%). 

“Fiat-backed tokens like an AED-pegged stablecoin serve as critical infrastructure for bridging traditional finance with the blockchain economy, offering price stability and real-world utility,” says Shunyet Jan, Head of Institutional and Derivatives at the Dubai-based exchange Bybit. 

He adds that these initiatives lay the groundwork for people to turn regular money into cryptocurrencies, which is key to unlocking broader accessibility and adoption.

Lin believes AE Coin will democratize participation in crypto because it requires only an internet connection and a digital wallet. “AE Coin utilizes blockchain technology to offer instant settlements with significantly lower fees, often as low as 0.1% or less. This cost efficiency is particularly advantageous for migrant workers,” she says.  

CAVEAT EMPTOR FOR CRYPTO REMITTANCES

However, users looking to start sending money abroad using digital tokens are also urged to understand the risks, which include price volatility, regulatory uncertainties, and security concerns like safeguarding private keys. Private keys are the digital equivalent of a password that gives someone full control over their crypto funds. If stolen or lost, there’s no way to recover the money. 

As with all digital tools, users may also be concerned about hacks. In February, North Korean hackers stole $1.5 billion in digital currency from accounts on ByBit. “Using secure wallets and staying vigilant against phishing helps users keep their assets safe,” Lin says.

It’s safest to use hardware wallets for transaction signing as they keep private keys offline. Again, like with a bank transfer, a mistake like selecting the wrong network or entering an incorrect address can result in the permanent loss of funds.

Finally, research the exchange or banking institution you’re using, Lin adds. “Liquidity can vary on smaller platforms, and network fees might rise during peak times, while access to on-ramp and off-ramp facilities (converting to and from crypto) can differ by region.”