Remittance Tax May Spur Crypto Adoption Resurgence

While crypto's remittance use case has failed to gain traction, this may be about to change. The Republican priority bill, referred to as the “big, beautiful bill” by President Donald Trump, proposes introducing a 5% tax on remittances sent by non-U.S. citizens to their home countries.

If Trump’s bill is passed as it stands, it would introduce a 5% tax on remittances, affecting over 40 million people and potentially generating over $3 billion in revenue.

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As reported by the Financial Times, the Republican priority bill, referred to by President Donald Trump as the “big, beautiful bill,” proposes introducing a 5% tax on remittances sent by non-U.S. citizens to their home countries. This measure, which has already faced rejection from countries like Mexico, would affect an estimated 40 million people in the U.S.

The bill's aim is to generate revenue by taxing the vast sums of money that migrants send home each year. For instance, in 2023, remittances to Mexico alone amounted to over $60 billion, according to Bank of Mexico figures.

However, even if the bill is applied, analysts believe these capital flows will find a way to reach their destination, evading this tax.

“Some senders would find ways to send money differently, through unauthorized channels, to avoid the tax. It would fall disproportionately on lower-income senders who use more expensive services to transfer smaller sums of money,” said Manuel Orozco, director of the Migration, Remittances, and Development Program at the Inter-American Dialogue.

This new use case for crypto could see a resurgence if Trump’s bill is passed, with migrants opting for self-hosted wallets or decentralized finance (DeFi) protocols to transfer their funds.

“[Those] self-hosted wallets are not covered by the bill because they are not remittance transfer providers, nor do they provide financial services, at least not according to the legislation’s definitions. That means that self-hosted crypto wallets would fall outside the scope of the bill,” noted Coin Center.

The crypto advocacy center added that the bill’s definition of remittance transfer providers includes "any person who, for fee or commission, engages in the transfer of funds or the payment of an underlying obligation, in an amount of $10,000 or less."

Despite the potential for crypto use, the report highlighted that most of the volume in the remittance market is processed by a small number of large financial institutions. These institutions would be directly impacted by the tax, which could ultimately lead to higher fees for consumers.

This new use case for crypto could see a resurgence if Trump’s bill is passed, with migrants opting for self-hosted wallets or decentralized finance (DeFi) protocols to transfer their funds.

“[Those] self-hosted wallets are not covered by the bill because they are not remittance transfer providers, nor do they provide financial services, at least not according to the legislation’s definitions. That means that self-hosted crypto wallets would fall outside the scope of the bill,” noted Coin Center.

The crypto advocacy center added that the bill’s definition of remittance transfer providers includes "any person who, for fee or commission, engages in the transfer of funds or the payment of an underlying obligation, in an amount of $10,000 or less."

Despite the potential for crypto use, the report highlighted that most of the volume in the remittance market is processed by a small number of large financial institutions. These institutions would be directly impacted by the tax, which could ultimately lead to higher fees for consumers.