Coincove is bringing a Coinbase-like wallet and exchange service to Mexico with its public launch today, allowing users to covert peso bank transfers into bitcoin.
Tomas Alvarez, a co-founder of the company, told CoinDesk that the service is important to bitcoin adoption in the Latin American country.
In the past, he indicated, it has been difficult to make the peso-to-bitcoin conversion, which sometimes meant having to deal with foreign exchanges.
“[Mexican users previously] didn’t have a way to get bitcoins except for wiring money to Bitstamp, or before to Mt. Gox,” said Alvarez.
Bringing the unbanked onboard
Coincove has been operating a private beta over the past few months with approximately 250 users.
Alvarez expects that, initially, most of Coincove’s post-beta customers will already be familiar with bitcoin. Over time, though, the company’s plan is to encourage more people into using the digital currency.
Bitcoin in Mexico is currently all about wagering on its price, as Alvarez readily admits, but there are some very promising use cases for digital currencies in that country – especially in services for the unbanked.
With that in mind, the company's aim is to promote its wallet as an easy-onramp into bitcoin, as well as a springboard into faster financial transactions.
These will be off-block chain and will not require confirmations to complete, said Alvarez, explaining:
“[The] benefit is [really] instant transactions; user-to-user. For normal users, I think that is a very important feature.”
Another big opportunity for Coincove is in remittance – for the most part, money being sent from the US to Mexico. "We are actually talking with some bitcoin ATM companies to integrate remittance," said Alvarez.
The company believes Texas is an ideal state for testing US-to-Mexico digital currency remittance.
A recent ruling in Texas means bitcoin exchanges do not require money transmission licences there. The same situation exists in Mexico, making for an ideal corridor to start trialling US-to-Mexico bitcoin remittance services, said Alvarez, adding:
"Texas says it is a digital asset. Mexico says it is a digital asset. You don’t need licences to start testing the system."
Over $20bn in remittances were sent from the US to its southern neighbour in 2013. According to the World Bank, the average cost of sending $200 from either a bank or money operator from the US to Mexico is $8.40.
Reducing those fees is an opportunity to take market share from incumbent players and is a key reason why Coincove and competitor Bitso are planning to move into the remittances arena.
Relaxed regulatory attitude
Mexico's policymakers appear to be taking a wait-and-see approach towards bitcoin, according to Alvarez:
“I talked to some representatives from the Bank of Mexico a few weeks ago. And they say that, for the moment, they’ll treat bitcoin as a digital asset.”
This means Coincove doesn’t have to follow the same type of KYC (know your customer) and AML (anti-money laundering) procedures that traditional financial institutions in the country have to.
Even so, they have decided to play it safe and put such procedures in place anyway:
“We are acting as a financial institution every though we are not required to,” said Alvarez.
About the company
Coincove recently completed the Boost VC startup incubator programme. During its time at the accelerator, it shifted its focus from remittances in Argentina – primarily made because of that country’s policy stance on bitcoin.
Coincove has spent a lot of time in the US in order to raise money and build its business, but it also plans to have a base of operations in Guadalajara, Mexico.
Alvarez says that Coincove has already hired one developer in the city and believes that it is vital to be as close to the company’s userbase as possible:
“At least the development team, we think, should be in Mexico. The feedback loop [for users] is faster and more efficient."
Coincove is now open for public registration. According to recent prices on its website, 1 BTC is worth around $5,882 MXN.
Guadalajara image via Shutterstock