Cuba becomes the latest country to authorise and regulate cryptocurrencies like Bitcoin and etc. Cuba’s government said on Thursday it will recognise and regulate cryptocurrencies for payments on the Carribean island.
A resolution published in the Official Gazette said the country’s Central Bank will set rules for such currencies and determine how to license providers of related services within Cuba. It comes as the Central American nation of El Salvador prepares to officially recognise the use of Bitcoin as a way to encourage remittances from its citizens living abroad when its crypto law comes into effect on September 7. The Cuban resolution, which will come into force on September 15, regulates “the use of certain virtual assets in commercial transactions, as well as the licensing of providers” of these services in “operations related to financial, exchange and collection or payment activities” in or from Cuban territory. The popularity of such currencies has grown among a technologically savvy group in Cuba as it has become harder to use dollars, in part because of toughened embargo rules imposed under former President Donald Trump
The currencies, which can wildly soar and depreciate in value, are mostly independent of any central bank and use widely distributed blockchain computer codes to keep track of transfers. Programmer Erich García, a local cryptocurrency expert, told AP some Cubans are already using such devices, often via gift cards, for online purchases. According to unofficial estimates, some 10,000 Cubans use Bitcoins, making it one of the most widely used cryptocurrencies in the country. Last May, President Miguel Díaz-Canel said his government was analysing the appropriateness of using cryptocurrencies in the economic operations of the country, whose GDP plunged by 11 per cent in 2020 due to the tightening of the US embargo and the impact of the COVID-19 pandemic. The resolution says the Central Bank can authorise the use of cryptocurrencies “for reasons of socio-economic interest” but with the state assuring that their operations are controlled.
It also explicitly noted that operations could not involve illegal activities .Because they can be used for long-distance transactions that are supposedly anonymous, they are often popular with people attempting to evade government regulations – presumably including US restrictions on sending money to places, such as Cuba.
However, receiving funds, even via crypto channels, requires some creativity, because many of the exchanges require know-your-customer compliance. “The minute that Cubans participate in this ecosystem, they face a lot of risks, even if they’re operating with a VPN where they’re able to hide their location,” said Tankha. Tankha told CNBC that many exchanges, including those not based in the U.S., continue to geo-block Cubans. Experts told CNBC that it is still a long road ahead for mass adoption of crypto in Cuba. The resolution itself — while a promising sign for Cubans keen to participate in the world economy via bitcoin rails — is hardly a warm embrace of all things crypto. The text includes a healthy dose of skepticism, such as a disclaimer warning citizens about the risks of virtual assets and the ancillary service providers, which the government says operate at the “margins of the banking and financial system.” But Sobrado is optimistic that any sort of regulatory attention with respect to crypto is a good thing. “Regulators around the world, from communist Cuba’s central bank to the SEC, are trying to come to grips with the cryptocurrency industry. This implies that crypto is a global phenomenon and regulators have decided that it’s here to stay and worth engaging with,” said Sobrado. “Strangely enough it’s bringing some sort of legitimacy to the space. It’s gotten too big to ignore,” he said.