The use of virtual currencies in small-value cross-border remittances and its implication

Abstract

Despite the efforts by regulatory authorities to promote the Fintech start-ups in the heavily regulated cross-border remittance market, its development has been slow and sporadic. The lingering uncertainty stems from a combination of factors: silo-type legacy infrastructures for regulatory oversight, the nascent global guidelines on the use of virtual currencies, and lack of relevant compliance services for start-ups. This paper highlights the glaring gap in regulatory arbitrage between the use of sovereign fiat currency and its digital counterpart for the cross-border value transfer. Developing a balanced ecosystem via relevant legal, supervisory, and regulatory support should be prioritized before situation-driven, fragmented and duplicate regulations are introduced.