When used responsibly, emerging technologies have the ability to address a variety of problems. Today’s major cryptocurrencies may not become the future of money itself, but the technology nonetheless serves as a useful mechanism to curb the high transaction fees and complex processing procedures incurred when sending money across borders. The following essay explains one way this technology can address a pain point in our global society while positively impacting the lives of millions trapped in poverty.

Introduction

At this very moment, 169 million migrant workers who represent 20 percent of the world’s workforce roam the globe in pursuit of economic opportunity.[1] The majority of these workers find employment in high-income countries[2] and send part of their earnings home to serve as a financial lifeline for their families.[3] These payments, called remittances, average between $200 and $300 each month but account for nearly 60 percent of a recipient family’s household income.[4] Of the $8.5 trillion expected to be remitted worldwide by 2030, approximately three-quarters will be spent lifting families out of poverty by providing them basic necessities such as food, shelter, education, and medical expenses.[5] Migrant workers typically recruit financial intermediaries who are specialized in cross-border payment chains to remit funds abroad.[6] However, such avenues are subject to long processing periods and exorbitant transaction fees that shave away the impact this money may have on poor communities.[7]

Emerging technologies like blockchain and cryptocurrency offer migrant workers a faster and less expensive method to remit funds home.[8] Many governments have been slow to regulate cryptocurrency,[9] and some nations heavily reliant on remittance inflows have stepped in to issue regulatory oversight to capitalize on the market’s uncertainty.[10] This report compares two remittance-reliant nations’ respective approaches to cryptocurrency regulation through the lens of building trust in cryptocurrency as a more effective means to send funds across borders. I ultimately suggest Bermuda’s regulatory regime will build trust in cryptocurrency’s use as a remittance method, while El Salvador’s model unnecessarily exposes its citizens to significant financial risk and may ultimately reduce trust in digital assets.

Part I: Transaction Fees and Potential of Cryptocurrency Remittances

Remittances are household incomes from foreign economies “arising mainly from the temporary or permanent movement of people to those economies.”[11] Approximately 800 million people across the globe rely on remittances from family members for daily survival.[12] Part I examines remittances’ ameliorative effects on global poverty, compares traditional remittance methods to cryptocurrency remittances and establishes the need for governments to build trust in cryptocurrency remittances.

lllllA.   Remittances in the Fight Against Global Poverty

Remittance inflows are critical to a nation’s economic health because they serve as reliable sources of capital for that nation. In 2020, global remittance flows to lower-income countries topped $540 billion, exceeding the sum of global annual foreign direct investment ($259 billion) and overseas development assistance ($179 billion) by more than $100 billion.[13] While Covid-19 economic and travel restrictions strained the international economy in 2020 and 2021, worldwide remittance flows grew throughout this period.[14] According to a recent study, 60 percent of consumers sending remittances across borders increased their payment amounts in 2020.[15] This was welcomed news for countries whose economies rely heavily on remittances, such as Bermuda and El Salvador, where remittance inflows account for approximately 20.65 percent and 24.01 percent of GDP, respectively.[16] The capital flowing into these nations spurs economic activity than can help reduce poverty rates abroad.

Rising poverty and widening inequality, especially in poorer nations,[17] presents one of the many challenges that the next generation of world leaders must address. By 2030, nearly a half billion individuals will be living in extreme poverty, and approximately 50 percent of the global poor will reside in fragile or conflict-afflicted nations.[18] The effects of the ongoing COVID-19 pandemic are expected to push more than 80 million people worldwide into the throes of extreme poverty over the next eight years.[19] But this estimate assumes a conservative economic scenario where global per-capita incomes shrink by only 5 percent.[20] When considering a realistic scenario of incomes falling by 10 percent, 180 million people could fall into extreme poverty as a result of the pandemic alone.[21] When considering this and additional factors contributing to global strife (such as the invasion of Ukraine[22] and the Taliban’s grip on Afghanistan[23]) the world’s extremely impoverished populations will most certainly increase by at least 80 million people by 2030.[24]

Remittances are a core component of economically struggling nations’ anti-poverty initiatives and tend to be more stable than other types of capital flows.[25] Remittance inflow totals typically increase during economic downturns because, when trouble arises, migrant workers remit more money home and make ends meet by reducing their living expenses abroad.[26] This provides poor countries and families with reliable sources of capital during their most desperate times.[27] A mere 1 percent increase in remittance inflows as a percentage of GDP can slash a nation’s poverty gap by nearly 23 percent.[28] It can also reduce the severity of poverty in that nation by about 16 percent.[29] Remittance inflows were shown to have specifically reduced poverty in Uganda by 11 percent, Bangladesh by 6 percent, and Nepal by about 5.5 percent over the last two decades.[30]

To further slow the spread of global poverty, the United Nations adopted Sustainable Development Goal 10.C.[31] The Goal seeks to reduce migrant remittance costs by 3 percent and “eliminate [all] remittance corridors with costs higher than 5 percent” by 2030.[32] By doing so, the U.N. can help expand streams of capital flowing into poorer nations by reducing the amount of money captured by financial intermediaries’ fees, ultimately helping to lift struggling nations and families out of poverty.[33] As discussed below, supplementing or replacing current remittance channels with new, lower-cost channels like cryptocurrency can potentially help the U.N. achieve its goal. However, the global poor tend to reside in rural areas and lack regular internet access, which is required to sustain cryptocurrency remittances.[34] Thus, the dire need to expand international (and domestic) digital infrastructure is a step that must necessarily precede much of what is discussed below.

lllllB.   Remittance Fees, Cryptocurrency, and Building Trust

Sending remittances can indeed be costly. The average sender of a $200 remittance payment using traditional methods incurs fees of approximately 6.34 percent (or $12.68).[35] This is primarily due to the sending agent charging the sender a transaction fee and a currency conversion fee to deliver local currency to the recipient abroad.[36] Remittance transaction fees fluctuate significantly depending on which countries are involved in the transaction and the sophistication of their respective banking systems.[37] For example, the average cost to send money to the Philippines in the fourth quarter of 2020 was 3 percent, whereas sending money from South Africa to Botswana in that same period cost an average of 19.6 percent.[38] Traditional transfers may also take upwards of five business days to complete.[39] In contrast, sending a remittance payment on the Ethereum blockchain can cost as little as $3 and can be completed in approximately five minutes.[40] As a result, remittance senders are increasingly choosing mobile wallet and cryptocurrency options over traditional money transfer services.[41] In fact, 24 percent of remittance senders choose a service simply because it allows them to send funds in cryptocurrency.[42]

In traditional banking, remittance payments are initiated between the sender and payment service provider (PSP).[43] Examples of PSPs include money transfer services like Western Union and MoneyGram, post offices, traditional banks, and online-only banks.[44] The PSP typically receives the funds from the sender, transfers payment information between the sending and receiving agents, and ensures the remittance recipient receives the money.[45] The PSP does not usually handle the back-end clearing and settlement of a money transfer.[46] Instead, various financial service providers contract with the PSP to provide specific services for specific stages of the payment process.[47] These back-end providers include foreign currency exchangers, financial crimes risk mitigators, and banks specializing in correspondent banking services.[48]

The correspondent banking model is currently the most relevant traditional back-end model used to send cross-border remittances.[49] Under this model, a sender in one country initiates a payment with a PSP, who then constructs the necessary back-end infrastructure required to deliver the funds to the international recipient.[50] To do this, the PSP recruits a domestic correspondent bank to facilitate the transaction with a foreign correspondent bank in the recipient’s country.[51] A “correspondent bank” is a bank that holds other banks’ deposits and performs various financial services for those other banks.[52] The foreign correspondent bank then constructs the necessary infrastructure to issue payment to the recipient through the recipient’s PSP.[53] Each link in the payment chain requires time to conduct the transaction and charges a fee to complete it.[54] This leads to the lengthy processing periods and high costs associated with traditional remittance payments.[55]

The rise of peer-to-peer technologies has prompted the banking system to explore new ways these technologies can be used to create more efficient, safer, and less expensive payment systems.[56] One such technology is blockchain. Blockchain is a peer-to-peer technology that verifies and records transactions on a distributed digital ledger.[57] Generally, there are two types of software architectures: centralized and distributed.[^58] A centralized architecture connects all computers operating on a network (called “nodes”^[59]) to a single, central component – often a server.^[60] This central server connects all nodes together indirectly and governs their operations.^[61] A distributed architecture, on the other hand, lacks any central server.[62] This allows the nodes to connect and interact directly with one another as peers governed only by the software’s protocol.^[63] Peer-to-peer systems rely on distributed architectures to allow nodes operating within that system to readily share computing and informational resources with one another.^[64]

Blockchain software leverages a distributed architecture to establish a peer-to-peer network of independent nodes that record transactions and other data in a digital ledger.^[65] The transaction record is then independently verified (or “mined”) by other nodes on the network.^[66] These records are considered trustworthy because, once a transaction has been verified by a node, it is recorded on a block and is thereafter unchangeable.^[67] A block is a file on a blockchain holding some of the transaction records of that blockchain.[68] Block space is finite; each block can store only as many records as the software protocol dictates. When a block reaches its storage capacity, a new block forms and is connected (or “chained”) to the previous block, allowing the recordation process to continue. While multiple nodes may verify the occurrence of the transaction, no single node may change the transaction data (such data includes, for example, the parties involved or the amount of the transaction).^[69] It may be helpful to envision a block as a page in a physical ledger book where each entry is written in permanent ink and corrections or scratch-outs of any kind are strictly prohibited. Once a page is filled, a new numbered page is added to the book directly behind the recently filled page.

Blockchain transactions usually occur in denominations of cryptocurrency. A cryptocurrency is a digital asset that is created by the blockchain software’s protocol and given to a node as a reward for completing a successful mining effort.^[70] The cryptocurrency reward serves as a mechanism to incentivize nodes to mine transaction records and compensates the node for expending scarce resources like electricity and time when mining.[71] The blockchain’s protocol maintains the network’s integrity by requiring that nodes reach consensus about the validity of a transaction prior to recording that transaction on a block.^[72] So, in essence, the transaction is recorded only if the majority of nodes agree on it. Cryptocurrencies and their allocation operate slightly differently per the rules enforced by each individual blockchain’s protocol and are sold on the open market.^[73]

The use of cryptocurrency as a remittance method presents a variety of opportunities. Concerning PSPs and other actors in the correspondent banking model, blockchain may be used to complete only part of the transaction, like clearing the payment.[74] Payment clearing involves transmitting, reconciling, and confirming the transaction, as well as establishing the final positions in each account to settle the payment.[75] Blockchain may also be used to create a complete end-to-end transaction processing platform by both clearing a transaction and exchanging transaction information and value between parties.[76] Additionally, senders might opt to avoid financial intermediaries altogether and directly send the payment themselves via a large public blockchain, such as Ethereum.[77]

Many cryptocurrencies are subject to extreme price volatility that may affect the purchasing power of the cryptocurrency remittance. For example, Bitcoin’s market price increased from $10,764 in September 2020, to $58,734 in March 2021 – an appreciation of approximately 445 percent.[78] Its price then plummeted more than 20 percent in January 2022, alone.[79] Senders should therefore remit funds using stablecoins to curb volatility risk. A stablecoin is a type of cryptocurrency whose price is stabilized by pegging the value of the coin to the value of other assets, such as gold or the U.S. dollar.[80] With broader adoption, stablecoins may therefore provide remittance senders a cryptocurrency with a predictable store of value.[81] The U.S. Treasury noted that such broader adoption likely depends on competitive transaction costs, convenient service options, and senders’ trust in stablecoin issuers.[82]

The general lack of trust in the cryptocurrency market is one barrier to the broader adoption of cryptocurrency remittances.[83] Capitalist economies of every scale require a strong presumption of trust to operate efficiently and grow.[84] The international economy is currently facing a “trust recession” that has been accelerated by the Covid-19 pandemic, and without institutional action, the effects of reduced economic trust will dampen economic outlooks far into the future.[85] Indeed, more than 57 percent of remittance senders who are not currently using a cryptocurrency method cite “trust in the service provider” as a key factor influencing their decision to use traditional – and more costly – methods.[86] Wary senders understandably prefer to pay a significant transaction fee and wait up to five days for the transaction to complete than risk their money never arriving abroad at all. And the cryptocurrency market is frequently susceptible to investment scams,[87] with losses totaling more than $14 billion in 2021.[88] However, the market capitalization for all digital assets topped $3 trillion that same year,[89] indicating that digital asset investors do not view these scams as a significant threat to the overall market.

Every would-be remittance dollar captured by an intermediary’s transaction fees is one less dollar available to feed families and spur economic activity in recipient countries. Building trust in cryptocurrency remittances does not necessarily require senders or recipients to use or even interact with cryptocurrency; rather, building trust is largely a matter of perception.[90] Proper and responsible regulatory regimes guiding cryptocurrency remittances may help to increase public trust in the method, spur economic activity, and reduce poverty rates in remittance-reliant nations.[91]

Part II: Comparing Bermuda, El Salvador’s Cryptocurrency Regulatory Regimes

Bermuda and El Salvador are heavily dependent on remittance inflows,[92] and each nation has developed and administered a unique cryptocurrency regulatory regime.[93] Part II examines the two nations’ respective approaches to cryptocurrency regulation through the lens of building trust in cryptocurrency remittances to increase remittance inflows and reduce poverty.

lllllA.   Bermuda’s Business Licensing Approach

Since its election in 2017, the current Bermudian government has promoted the financial technology (fintech) sector as a core pillar of the small island nation’s economic future.[94] In an effort to capitalize on the general lack of cryptocurrency regulation across the globe, Bermuda was one of the first nations to provide the cryptocurrency market with regulatory certainty in hopes of attracting fintech firms to its doorstep.[95] Specifically, Bermuda enacted the Digital Asset Business Act (Act) in September 2018, and granted the Bermuda Monetary Authority (BMA) power to regulate persons “carrying on digital asset businesses.”[96] In November 2021, the BMA published two additional consultation papers supplying digital asset businesses with further guidance when navigating Bermuda’s regulatory framework.[97]

Under the Act, a digital asset business (“DAB”) is broadly defined as a business that deals in issuing, selling, or redeeming digital assets; operates as an electronic exchange or digital asset services vendor; provides custodial wallet[98] services; or transfers digital assets.[99] The term transfer requires the entity take control of a client’s digital assets “for the purposes of crediting the digital assets to the account of another person; moving the digital assets from one account of a client to another account of the same client; [or] relinquishing control of digital assets to another person.”[100] However, assuming the sender or receiver does not use a custodial wallet[101] and transmits the payment themselves on a blockchain, cryptocurrency remittances interact with DABs only when converting the payment from cryptocurrency to fiat currency. This conversion may soon be unnecessary: Bermuda is currently experimenting with stablecoins as a means through which citizens may pay their taxes and receive public stimulus funds.[102]

The Act requires DABs apply for a license from the BMA to conduct business operations “in or from within” Bermuda.[103] Two types of licenses exist: Class F and Class M.[104] The Class F license allows a DAB to conduct business operations indefinitely.[105] This can be thought of as a full license.[106] The Class M license also allows a DAB to conduct business operations; however, the license is granted only “for a defined period determined by the Authority.”[107] This license type is typically for DABs with innovative business models that the BMA determines should be subject to a regulatory sandbox period.[108] Additionally, the BMA may decide which license applies to the individual DAB, regardless of the particular license type the DAB requested in its application.[109]

Upon receiving a license, the DAB must adhere to the following relevant stipulations:

i. The DAB must establish a head office in Bermuda and be “directed and managed” from Bermuda.[110] By requiring the DAB be physically present in Bermuda, individuals considering sending remittances via cryptocurrency may be more inclined to do so because they recognize that the DAB is present in their home country and subject to its laws. This allows them to place more trust in that DAB. It also naturally provides Bermuda with definite jurisdiction to tax the DAB.

ii. The DAB must display its license at its principal place of business, and the BMA will publish a list of every granted license and license type on its website.[111] This promotes trust in cryptocurrency remittances by allowing Bermudans to easily and quickly verify that a DAB is indeed government licensed.

iii. A DAB holding client assets must also maintain a surety bond, trust account, or insurance for the client, and it must hold an amount of each type of digital asset sufficient to meet its obligations to its clients.[112] This ensures Bermudans can trust the liquidity of their digital asset account’s balance and, through this, the DAB itself.

Through the Act, Bermuda requires digital asset businesses to comply with its regime, chipping away at the negative perceptions surrounding cryptocurrency and bolstering trust in the technology’s use as a valid remittance method. As trust increases, more Bermudans may opt to send remittances via cryptocurrency to ensure their families stay afloat. The effects of this can allow more funds to reach Bermudans (not commercial banks or financial intermediaries) and spur economic activity within the nation.[113]

lllllB.   El Salvador’s Legal Tender Approach

El Salvador’s Bitcoin Law (“Decree”) took effect on September 7, 2021, and established Bitcoin as legal tender in the Latin American nation.[114] El Salvador has used the United States dollar as legal tender since 2000, and will continue to do so under the Decree, becoming a dual-currency economy.[115] This decision was rightly met with intense skepticism by the international community[116] and has even been called “reckless” by some.[117] Back home, many El Salvadorans echo this skepticism and fear the Decree will reduce their purchasing power and promote money laundering in the country.[118] Nonetheless, 70 percent of El Salvador’s citizens are unbanked, and President Nayib Bukele hopes weaving Bitcoin into the nation’s economic framework will increase financial inclusion and spur economic growth.[119] Though the Decree may lead to some degree of financial inclusion, 30 percent of El Salvadorans still lack internet access.[120] This stands as a major hurdle to providing all El Salvadoran citizens with banking services—Bitcoin or not.[121]

The Decree is brief and, in relevant part, stipulates:

i. Bitcoin is accepted as legal tender in any amount and for any purpose that “public or private natural or legal persons require carrying out,” and every economic agent must accept Bitcoin as payment for goods and services.[122]

ii. If an economic agent cannot access the technologies necessary to transact in Bitcoin, it is excluded from the requirement to accept Bitcoin as payment, and El Salvador will provide “the necessary training and mechanisms so that the population can access Bitcoin transactions.”[123]

iii. The exchange rate between Bitcoin and the U.S. dollar is determined by the open market.[124]

iv. Prices may be expressed in Bitcoin; tax contributions may be paid in Bitcoin; and converting currency to Bitcoin is not subject to a capital gains tax.[125]

v. El Salvador will provide the means to allow users to “carry out transactions in Bitcoin and have automatic and instant convertibility from Bitcoin to [U.S. dollars].”[126]

With regard to remittances, the Decree nullifies the issue of remittance recipients having to convert their cryptocurrency into domestic fiat currency prior to spending it. If the remittance was sent in Bitcoin, it is now instantly spendable anywhere in El Salvador upon receipt. This may have the effect of building trust in cryptocurrency remittances through sheer force and accessibility because senders may choose cryptocurrency methods simply because it is now convenient and inexpensive. While this can help to avoid the high transaction fees of traditional remittance options, it does little to bolster trust in cryptocurrency’s validity as a remittance method. On the contrary, establishing Bitcoin as legal tender in El Salvador exposes every citizen of one of the poorest nations in the western hemisphere to the substantial volatility risk inherent in Bitcoin.[127] If the Decree backfires, it may potentially reduce trust in cryptocurrency remittances by confirming the potential dangers of many digital assets.

Coupled with a botched roll-out rife with software bugs and big rhetoric,[128] President Bukele doubled down on his questionable currency scheme and recently purchased an additional 150 Bitcoins amid a 30 percent market slide in hopes of turning a profit.[129] Instead of responsibly weaving technology throughout El Salvador and promoting digital literacy to help address the deep economic and social issues facing the nation,[130] Bukele has turned El Salvador’s coffers into a high-risk, speculative investment account. As a result, Moody’s downgraded El Salvador’s credit rating,[131] and all three main credit rating firms cast doubt on El Salvador’s ability to repay its debts.[132] In apparent response, Bukele stubbornly announced a $15 billion plan to construct a “Bitcoin City” that will be circular in shape to represent a coin, allegedly powered by a volcano, untaxed, and funded by issuing Bitcoin bonds.[133] Meanwhile, more than 91 percent of El Salvadorans prefer the United States dollar to Bitcoin, while less than 5 percent prefer Bitcoin.[134] Though it may be no surprise, Bukele’s cryptocurrency gamble has yet to pay off.[135]

Conclusion

Cryptocurrency provides opportunities to reduce transaction fees associated with remittance payments for populations and nations struggling to overcome poverty.[136] Lower transaction fees allow senders to transfer more money home to their families, thus spurring economic activity abroad and providing recipients with funds to survive daily life. For nations heavily dependent on remittance inflows, adopting regulatory regimes like Bermuda’s Digital Asset Business Act may bolster trust in cryptocurrency as a valid remittance method. However, to avoid the issue El Salvador’s president has placed his nation in, government officials must first intelligently and accurately assess the risks of these regulatory regimes to ensure no further damage is done to the economic health of their citizenry and nation.

ABOUT THE AUTHOR

Seth Trott is a law student at Penn State Dickinson Law, where he is Editor-in-Chief of the Dickinson Law Review. A graduate of the Jefferson Educational Society’s Civic Leadership Academy and Raimy Fellowship Program, he earned undergraduate degrees from Gannon University and founded an energy technology startup shortly thereafter. Trott will be returning to Erie to join the Quinn Law Firm after school.

End Notes

[1] Migrant worker numbers rise by five million: ILO, United Nations: Dept. Econ. and Soc. Affairs (June 30, 2021), https://perma.cc/H6FJ-E5F6.

[2] Id.

[3] See Joshua Jahani, Crypto remittances are a lifeline for the world’s most vulnerable, TechCrunch (Oct. 9, 2021, 9:23 AM), https://perma.cc/NX8F-6GPN; Defying Predictions, Remittance Flows Remain Strong During COVID-19 Crisis, World Bank Group (May 12, 2021), https://perma.cc/C4NH-GFZ2.

[4] Remittances matter: 8 facts you don’t know about the money migrants send back home, United Nations, https://perma.cc/YSX2-5LGB (last accessed Jan. 13, 2022).

[5] Id.

[6] See Dilip Ratha, What Are Remittances?, Int’l Monetary Fund, https://perma.cc/C5QX-A8X4 (last accessed Jan. 25, 2022).

[7] United Nations, supra note 4.

[8] Crypto Finds Growing Acceptance in Cross-Border Remittances, PYMNTS (Dec. 2, 2021), https://perma.cc/C3TU-E5ZV.

[9] See Eric Lipton et al., Regulators Racing Toward First Major Rules on Cryptocurrency, N.Y. Times (Nov. 1, 2021), https://perma.cc/J3W4-JGCP.

[10] See, e.g., Digital Asset Business Act, 2018 (2018:28) (Berm.), https://perma.cc/XPB9-Y2CL.

[11] International Monetary Fund, Balance of Payments and International Investment Position Manual 272 (6th ed. 2009).

[12] William Lacy Swing, How migrants who send money home have become a global economic force, World Econ. Forum (June 14, 2018), https://perma.cc/H2ME-KYQE.

[13] World Bank Group, supra note 3.

[14] Crypto Fast Becoming a Preferred Payment for Remittances, Nasdaq: ETF Trends (Oct. 26, 2021, 1:09 PM), https://bit.ly/3xk003a.

[15] New Study: Crypto Emerging as a Favored Form for Cross-Border Remittances, PYMNTS (Oct. 26, 2021), https://perma.cc/RZ4M-HQBL.

[16] Personal remittances, received (% of GDP) – Bermuda, World Bank, https://perma.cc/275S-BE37 (last accessed Dec. 6, 2021); Personal remittances, received (% of GDP) – El Salvador, World Bank, https://perma.cc/C6WM-EXY6 (last accessed Dec. 6, 2021).

[17] Carolina Sánchez-Páramo et al., COVID-19 leaves a legacy of rising poverty and widening inequality, World Bank: Blogs (Oct. 7, 2021), https://perma.cc/L8V8-6AGL.

[18] Colin Andrews et al., The State of Economic Inclusion Report 2021: The Potential to Scale 17 (2021), https://perma.cc/YEN7-HQAL.

[19] Id. at 17.

[20] Id. at 34.

[21] Id.

[22] Airielle Lowe, Pandemic and War Reversed Decades of Global Poverty Reduction: World Bank, Time (Oct. 5, 2022, 11:08 AM), https://bit.ly/3erORIM; Xinhua, One in five facing hunger in Africa as malnutrition worsens, Monitor (Oct. 12, 2022), https://perma.cc/RKV5-3PL6.

[23] Justin McCarthy & RJ Reinhart, Afghanistan’s Failing Economy Taking Afghans With It, Gallup (Apr. 4, 2022), https://perma.cc/3FFV-8TA3.

[24] For perspective, this is more than the collective population of Pennsylvania, New York, California, and Arizona. See Population of the US States and principal US territories, Nations Online, https://perma.cc/W7N7-TQ9F (last accessed Sept. 12, 2022).

[25] Richard H. Adams & John Page, Do International Migration and Remittances Reduce Poverty in Developing Countries?, 33 World Dev. 1645, 1660 (2005), https://perma.cc/X2R4-A97D (concluding remittances “have a strong, statistically significant impact on reducing poverty in the developing world”).

[26] Id.

[27] Id.

[28] Naoyuki Yoshino et al., International Remittances and Poverty Reduction: Evidence from Asian Developing Countries 5, 18 (2017), https://perma.cc/6NEW-PF42.

[29] Id. at 18.

[30] Dilip Ratha, Remittances: Funds for the Folks Back Home, Int’l Monetary Fund: Fin. & Dev., https://perma.cc/L6ME-89QW (last accessed Oct. 5, 2022).

[31] United Nations, Transforming Our World: The 2030 Agenda for Sustainable Development 26 (2015), https://perma.cc/9A3M-MKRR.

[32] Id.

[33] See Deepali Fernandes, Amil Aneja & Azar Sultanov, Understanding informal remittances, Central Banking (June 16, 2022), https://perma.cc/Q2MM-9KQE.

[34] World Bank, Correcting Course: Poverty and Shared Prosperity 39 (2022), https://perma.cc/ZL5F-FX28.

[35] See World Bank Group, supra note 3.

[36] Ratha, supra note 6.

[37] See World Bank Group, supra note 3.

[38] Id.

[39] See, e.g. Cecilia Hendrix, How long do international money transfers take?, Western Union (Apr. 5, 2021), https://perma.cc/WW8Q-C8PV (explaining “most international bank transfer times are quoted as 1-5 business days,” but a variety of factors can affect the time required to complete the transfer).

[40] Ethereum Average Transaction Fee, YCharts, https://perma.cc/SA2G-MX83 (last accessed Dec. 29, 2021) (reporting an Ethereum transaction on Dec. 27, 2021, would cost the sender approximately $2.85 to complete); Payal Shah, Six Reasons Why Ethereum Has Intrinsic Value, Reuters (Sept. 3, 2021, 10:30 AM), https://perma.cc/UFS3-MTHK (explaining the average Ethereum transaction takes about 5 minutes to complete).

[41] PYMNTS & Stellar Development Foundation, The Digital Currency Shift: The Cross-Border Remittances Report 17 (2021), https://perma.cc/32VF-YDQG. A mobile wallet is a type of payment service that allows individuals and businesses to send and receive money using mobile devices. Mobile Wallet, Techopedia, https://perma.cc/Q9A7-W3GE (last accessed Jan. 21, 2022).

[42] Id. at 19.

[43] Bank for International Settlements, Committee on Payments and Market Infrastructures: Cross-Border Retail Payments 7–8 (2018), https://perma.cc/7G54-S4DV.

[44] Id. at 8.

[45] Id.

[46] Id.

[47] Id. at 11–12.

[48] Id.

[49] See id. at 14.

[50] Id. at 12–14.

[51] Id. at 13–14.

[52] Id. at 13.

[53] Bank for International Settlements, Committee on Payments and Market Infrastructures: Cross-Border Retail Payments 13–14 (2018), https://perma.cc/7G54-S4DV.

[54] Id. at 13.

[55] Id.

[56] David Mills et al., Federal Reserve Board, Washington, D.C.: Distributed Ledger Technology in Payments, Clearing, and Settlement 3 (2016), https://perma.cc/6B3C-QZ7Z.

[57] See Bank for International Settlements, Committee on Payments and Market Infrastructures: Distributed Ledger Technology in Payment, Clearing and Settlement – An Analytical Framework 1 (2017), https://perma.cc/UF7T-5LG9.

[58] Daniel Drescher, Blockchain Basics: A Non-Technical Introduction in 25 Steps 10–11 (2017).

[59] See Primavera De Filippi & Aaron Wright, Blockchain and the Law: The Rule of Code 17 (2018); Tiana Laurence, Blockchain for Dummies 8 (2nd ed. 2019).

[60] Drescher, supra note 58, at 11.

[61] See id. at 11, 13.

[62] Id. at 11.

[63] Id. at 11, 23.

[64] Id. at 17.

[65] Antony Lewis, The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them 326 (2018); Tiana Laurence, Blockchain for Dummies 8–9 (2nd ed. 2019).

[66] Wenbo Wang et al., A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks, 7 IEEE Access 22328, 22329 (2019), https://perma.cc/6FNP-TSFQ.

[67] Drescher, supra note 58, at 60.

[68] Neel Mehta et al., Bubble or Revolution? The Present and Future of Blockchain and Cryptocurrencies 18 (2nd ed. 2020). See id. at 18–21.

[69] De Filippi & Wright, supra note 59, at 35.

[70] Chris Burniske & Jack Tatar, Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond 15–16 (2018).

[71] Antony Lewis, The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them 9 (2018).

[72] De Filippi & Wright, supra note 59, at 21.

[73] See id. at 39–42.

[74] Bank for International Settlements, supra note 43, at 10.

[75] Id.

[76] Id. at 11.

[77] See PYMNTS & Stellar Development Foundation, supra note 41, at 11.

[78] Bitcoin (BTC) price per day from October 2013 to January 25, 2022, Statista (Jan. 2022), https://perma.cc/H8MV-V8TE.

[79] See id.

[80] Alyssa Hertig, What Is a Stablecoin?, CoinDesk (Oct. 14, 2021), https://perma.cc/D7CJ-QWAY.

[81] See Christian Catalini and Jai Massari, Stablecoins and the Future of Money, Harv. Bus. Rev. (Aug. 10, 2021), https://perma.cc/TH75-T8CJ.

[82] U.S. Dept. Treasury, President’s Working Group on Financial Markets: Report on Stablecoins 8 (2021), https://perma.cc/5J8X-W6XG.

[83] See PYMNTS & Stellar Development Foundation, supra note 41, at 21.

[84] See generally Paul J. Zak & Stephen Knack, Trust and Growth, 111 Econ. J. 295 (2001), https://perma.cc/ZJT5-CDRJ (discussing the importance of trust among economic actors in promoting economic growth).

[85] See Jerry Useem, The End of Trust: Suspicion is undermining the American economy, The Atlantic (Nov. 24, 2021), https://perma.cc/454D-48NH.

[86] See PYMNTS & Stellar Development Foundation, supra note 41, at 21.

[87] Emma Fletcher, Cryptocurrency buzz drives record investment scam losses, Fed. Trade Comm’n: Data Spotlight (May 17, 2021, 10:29 AM), https://perma.cc/C9P3-QDFA.

[88] MacKenzie Sigalos, Crypto scammers took a record $14 billion in 2021, NBC News (Jan. 6, 2022, 10:26 AM), https://perma.cc/M7B8-3XZ6.

[89] 2021 Digital Asset Regulatory Lookback (US Edition), Latham & Watkins LLP (Jan. 25, 2022), https://perma.cc/9BKN-ZBQ8.

[90] See David DeSteno, The Simplest Way to Build Trust, Harv. Bus. Rev. (June 2, 2014), https://perma.cc/QNR4-4MHU.

[91] See Maria De Benedetto et al., Taking Trust in Government Seriously, Regul. Rev. (Jan. 25, 2021), https://perma.cc/F7BA-K3ZR (explaining well-crafted regulation can, in part, increase public trust in markets); see Naoyuki Yoshino et al., supra note 28, at 18; see Ratha, supra note 30.

[92] See World Bank, supra note 16.

[93] See generally Digital Asset Business Act, 2018 (2018:28) (Berm.), https://perma.cc/D6ZP-GC97; see generally Bitcoin Law, 2021 (Decree No. 57) (El Sal.), https://perma.cc/4LKR-MAPG (providing the original Spanish text of El Salvador’s Bitcoin Law); see generally Avik Roy, El Salvador’s Bitcoin Law: Full English Text, Found. for Rsch. on Equal Opportunity (June 8, 2021), https://perma.cc/972P-TQR3 (providing an English translation of the text of El Salvador’s Bitcoin Law).

[94] Carey Olsen, Bermuda Blockchain and Cryptocurrency Regulation 2020 2 (2nd ed. 2020).

[95] Id. at 2; Bermuda Cryptocurrency Law, Freeman L., https://perma.cc/CA62-2P2H (last accessed Dec. 4, 2021).

[96] Digital Asset Business Act, 2018 (2018:28) (Berm.) at 4 (granting the BMA regulatory power over digital asset businesses in the Act’s preamble).

[97] See generally Bermuda Monetary Authority, Consultation Paper: Digital Asset Business Amendment Act 2021 (2021), https://perma.cc/2PSE-RSGP (providing changes and further clarifications to some provisions of the Act); see generally Bermuda Monetary Authority, Guidance Notes: General Regulatory Sandbox and Innovation Hub Application and Approval Guidelines (2021), https://perma.cc/66MJ-U3JA (providing guidance on Bermuda’s regulatory sandbox for businesses innovating in the digital asset space).

[98] A custodial wallet is a type of digital wallet that “keeps a customer’s private keys and provides backup and security.” Solomon Brown, Custodial and non-custodial wallet comparisons, Freewallet (July 10, 2020), https://perma.cc/PAC5-YACG.

[99] Digital Asset Business Act, 2018 (2018:28) (Berm.) §§ (2), (2)(a)–(e).

[100] Id. at 6 (defining “transfer”).

[101] See id. at § (2)(d).

[102] Sandali Handagama, Government of Bermuda Pilots Stimulus Token in Response to COVID-19 Crisis, CoinDesk (Sept. 14, 2021, 5:50 AM), https://perma.cc/28ED-KKSE.

[103] Digital Asset Business Act, 2018 (2018:28) (Berm.) §§ 4(1)(a)–(b), 10(1), 10(2)(b).

[104] Id. at §§ 12(3)(a)–(b).

[105] See id. at § 12(3)(a).

[106] Olsen, supra note 94, at 3.

[107] Digital Asset Business Act, 2018 (2018:28) (Berm.) § 12(3)(b).

[108] Olsen, supra note 94, at 3.

[109] Digital Asset Business Act, 2018 (2018:28) (Berm.) § 14(1).

[110] Id. at § 21(1)–(2).

[111] Id. at §§ 15(1), (2).

[112] Id. at §§ 18(1), (3).

[113] See Remittance Flows Register Robust 7.3 Percent Growth in 2021, World Bank (Nov. 17, 2021), https://perma.cc/J64R-34VJ.

[114] See generally Bitcoin Law, 2021 (Decree No. 57) (El Sal.); Avik Roy, In El Salvador, More People Have Bitcoin Wallets Than Traditional Bank Accounts, Forbes (Oct. 7, 2021, 11:17 AM), https://perma.cc/5ZDZ-7BFN.

[115] Bitcoin Law, 2021 (Decree No. 57) (El Sal.) Preamble at 2; see Joe Hernandez, El Salvador Just Became The First Country to Accept Bitcoin As Legal Tender, NPR (Sept. 7, 2021, 4:57 PM), https://perma.cc/DJ3V-QNVT.

[116] See Samuel Wan, Bank of England chief expresses concern over El Salvador’s Bitcoin experiment, CryptoSlate (Nov. 26, 2021, 11:00 PM), https://perma.cc/9KMA-MM99.

[117] See Tom Rees & Louis Ashworth, World watches through its fingers as El Salvador bets on Bitcoin, Telegraph (Nov. 24, 2021, 6:00 AM), https://perma.cc/3CUW-VHVP; Jacob Oliver, Vitalik Buterin Slams El Salvador's Bitcoin Adoption Policy, Crypto Briefing (Oct. 8, 2021), https://perma.cc/KA2L-AG9B.

[118] Ethan Wu, Protests are breaking out against El Salvador's planned bitcoin adoption, with demonstrators decrying the token's volatility and potential for corruption, Market Insider (Aug. 31, 2021, 10:06 AM), https://perma.cc/FNG5-GM9Y.

[119] Bitcoin Law, 2021 (Decree No. 57) (El Sal.) Preamble at 3–5.

[120] Max Yakubowski, What is really being El Salvador’s ‘Bitcoin Law?’ Experts answer, CoinTelegraph (July 2, 2021), https://perma.cc/ZF2N-AKLU.

[121] See id.

[122] Bitcoin Law, 2021 (Decree No. 57) (El Sal.) Arts. 1, 8.

[123] Id. at Art. 12.

[124] Id. at Art. 2.

[125] Id. at Arts. 3–5.

[126] Id. at Art. 8.

[127] Albinson Linares, A ‘Bitcoin City’ in El Salvador inspired by ancient Greeks? Here’s a reality check, NBC News (Nov. 30, 2021, 10:38 AM), https://perma.cc/TF4P-ASM6.

[128] Michael J. Casey, Why El Salvador Is Botching Its Bitcoin Experiment, CoinDesk (Sept. 24, 2021, 1:02 PM), https://perma.cc/VP5J-W75G; see Glitches, Fraud and High Fees Upset El Salvador's Bitcoin Chivo Wallet Users, PYMNTS (Oct. 31, 2021), https://perma.cc/XPG4-FQBB.

[129] Nelson Renteria, Bukele steps up El Salvador's bet on sliding bitcoin; buys another 150 coins, Reuters (Dec. 4, 2021, 7:41 PM), https://perma.cc/8SWR-PVKB.

[130] See, e.g., El Salvador: Events of 2019, Human Rights Watch, https://perma.cc/7EWZ-D6ZW (last accessed Sept. 20, 2022).

[131] Moody’s Downgrades El Salvador’s Rating to Caa1, Maintains Negative Outlook, Moody’s (July 30, 2021), https://perma.cc/43WX-F3SS.

[132] El Salvador – Credit Rating, Trading Economics, https://perma.cc/9BXD-UWYR (last accessed Dec. 6, 2021).

[133] El Salvador Bitcoin city planned at base of Conchagua volcano, BBC News (Nov. 21, 2021), https://perma.cc/EJ8M-HLJV.

[134] K. Urquilla, More than 91% of Salvadorans prefer the dollar over Bitcoin, according to new survey, ElSalvador.com (Nov. 22, 2021, 5:00 PM), https://perma.cc/4XR7-FGBG.

[135] Eric Martin, Ditch Bitcoin: IMF Urges El Salvador to Rethink Crypto, Bloomberg (Jan. 25, 2022, 2:30 PM), https://perma.cc/S3KS-5V2M.

[136] Amine Soufaih, Revolutionizing International Remittance Payments Using Cryptocurrency and Blockchain-based Technology, Univ. of Pa.: Soc. Impact Rsch. Experience (Sept. 1, 2020), https://perma.cc/X8WD-JKTV (concluding sending remittances via blockchain can reduce cross-border remittance fees).

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