The Cuban government resolved on August 26th to recognise and regulate the use of cryptocurrency on the Island. The resolution took effect after it was published in the Official Gazette. This is the first step to making crypto a legal tender like El Salvador. However, the Central Bank will determine the regulations that govern crypto payments and license crypto exchanges and service providers.
The adoption of cryptocurrency is a welcome move due to the increased popularity of digital currency among tech-savvy groups. Besides, the embargo rules imposed on Cuba under the Donald Trump administration makes it challenging to use or send US dollars on the Island. Hence, using crypto could help them circumvent the sanctions. Receiving or sending money between the USA and Cuba became difficult after the introduction of sanctions. While Cuba expected Biden’s government to ease the restrictions, it upheld the sanctions.
Due to the embargo rules, Western Union, which was a significant remittance channel, closed down over 400 locations in 2020. The pandemic complicated remittances further since Cubans were sending money through courier services. When the flights were grounded, it blocked Cuba’s access to the world economy.
Embracing digital currency is a historic and unexpected move since a conservative government runs the country. However, they are cautiously regulating the crypto trade and introducing licensing for crypto exchanges. The official communication stated that the adoption of crypto was for socioeconomic interest. It also explicitly forbids the use of bitcoin for illegal activities.
The burgeoning crypto community is due to the improved internet connectivity in Cuba and the need for convenient money transfers. However, the use of digital currency will transcend cross-border money transfer. Since the local Cuban currency is weak, bitcoin is more appealing for people looking to generate income online. Many people residing on the Island already use crypto for online purchases and receive payment for online jobs.
