Igot, an Australian bitcoin exchange, is set to launch in Kenya today, using M-Pesa as a deposit and withdrawal method for customers in the African country. The international exchange now offers services in more than 40 countries around the world after raising funding from a major US investor last summer. Due to the popularity of M-Pesa in Kenya, the adoption of bitcoin in Kenya has been one of the key topics of concern for bitcoin evangelists.
I asked Igot founder Rick Day about the importance of bringing its trading platform to Kenya, and he first mentioned international remittances. Day recognized the serious problems that Kenyan immigrants face when trying to send money home, and expanded on these issues with real data:
“Over 2.5 million Kenyan migrants around the world send remittances to their families back home. Igot’s goal is to make these transactions as simple, fast and convenient as possible. In 2014, remittance inflows to Kenya increased by $137 million (11%) to $14.285 billion. The average remittance transaction costs the migrant sender between $5% and $9%.”
Lowering the cost of international remittances has been seen as a potential use case for Bitcoin by many believers for years, but we are only now seeing startups that share this promise launch in places like Kenya and the Philippines. Day also commented on the importance of enabling M-Pesa for deposits and withdrawals. He noted: “M-PESA has over 15 million users in Kenya, making it one of the most important ways to transfer money on a mobile platform.”
After noting that Igot does not currently accept US customers, I wondered if expensive regulatory compliance could be the reason behind this business decision. Bitcoin entrepreneurs Erik Voorhees and Chris Odom have spoken about their concerns about regulatory requirements for US Bitcoin companies, but Day claimed that Igot has no intention of avoiding the US market:
“We don’t currently accept US customers, as Bitcoin exchanges in the US are required to obtain a money services business license. Technically, as an Australian entity we can accept US customers, but we are planning to launch in the US in the next month or so and want to make sure we do everything legally.”
Day also explained that the exchange can currently only accept international wire transfers as a deposit method for U.S. customers. He said: "(International wire transfers) expose (U.S. customers) to bank fees and exchange rate losses. It doesn't make sense for U.S. customers to use an international exchange."
Since Bitcoin is most useful for the unbanked in developing countries, there are many waiting to see how digital currency develops in Kenya. BitX is another exchange that provides Bitcoin services to M-Pesa users in Kenya, and BitPesa recently received a $1.1 million cash injection to serve as an alternative for international remittances and low-cost payments. With all these Bitcoin companies making moves in the East African country, it seems that we are about to see the positive impact of cryptocurrency on the “other 6 billion people.”
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