Western Union shares have plunged following the Mexican president’s cancellation of a meeting with Donald Trump, underscoring the need for less nationally vulnerable payment systems like Bitcoin.
Following an announcement by the American president that he intended to begin construction on a southern border wall immediately, funded by a 20 percent tariff on imports from Mexico, Mexican president Enrique Peña Nieto canceled a planned meeting between the two. This conflict between the two nations, who are significant trading partners, caused economic shock waves including a sharp hit to popular remittance payment company Western Union.
Marco Montes Neri, founder of cross-border payments company Saldo.mx believes that temporary market fluctuations based on presidential statements will lessen when the reality of government action must first go through the legislature:
“I think talk is easy and it’s all that Trump has been doing, signing and saying things expecting markets to react. The truth is that the majority of those words will have to go through other filters so it is likely to start seeing markets not reacting as much as we start seeing congressional disapproval.”
Robert Genito, CEO of Genitrust, which operates the peer-to-peer cash for crypto exchange Wall of Coins, quipped that while Trump intends to fund a border wall, “…he’ll be funding Wall….of Coins.” He believes that no matter the short term effects long term political moves like these will have drastically reduced effects on the economy: “I don’t follow up with politics. All I care about is crypto: cryptocurrency will render politics–as we know it today–irrelevant.”
Bitcoin as a safe haven from a devaluing peso
Following Peña Nieto’s decision to cancel a meeting with Trump because of the tariff announcement, the peso plunged over one percent against the dollar. Investment in currencies such as Bitcoin can help alleviate these ill-effects.
Neri sees tech adoption to still be too immature at this point but points out the value of finding a non-governmental basis for economic development: “The reality is that adoption hasn’t grown to a point where even regulators provide clarity or that companies can store value in any alternative currency. This really can show how important it is to think about cluster economies as a replacement to nation based economies that will always unjustly threaten some companies’ existence.”
Jose Rodriguez, head of payments and business development at Mexican cryptocurrency exchange Bitso, sees Bitcoin as a way for Mexicans to escape the devaluation effects of their national currency: “These measures, in case they are imposed, would make most of the population look for other options like Bitcoin and other crypto. Around the world Bitcoin, for example, has been a relief for economical and political problems, bank runs and bad policies. It’s giving the people back the freedom to use and operate their money in the most convenient way.”
Cryptocurrency interest in Mexico surges
As a reaction to economic woes affecting Mexico, as well as potential future problems as a result of US policy, alternative currencies like Bitcoin go up, according to Rodriguez:
“Mexicans are seeing Bitcoin as an option to preserve value. The Mexican peso has lost almost 50 percent of its value against the US dollar in the last two years. Each time Trump makes an announcement that could harm income and international trade with Mexico, the dollar and Bitcoin value goes up against the Mexican peso.”
This interest in preserving the value of their savings can be seen reflected in Bitcoin trading volume. Buying and selling of Bitcoin on peer-to-peer trading platform LocalBitcoins has seen dramatic increases since the United States election and Rodriguez has seen similar interest in Bitso powered by Trump-related fears:
“People have reached out to Bitso and the Bitcoin community asking about using Bitcoin for international payments, investments or an alternative in case remittances are heavily taxed or shut down.”