Cuba will now recognize and regulate cryptocurrencies such as bitcoin, citing ‘reasons of socioeconomic interest.’
Resolution 215, which was published Thursday in the state-run Official Gazette, says the central bank will set new rules for how to deal with digital currencies. To continue their operations, commercial providers of similar services will need to obtain a license from central bank.
Cuba has been a pariah of the global economy due to the American embargo against the communist state. Cuba’s decision, along with El Salvador, to embrace decentralized virtual money could allow it to bypass the U.S. sanctions regime that was increased under former President Donald Trump. This has been extended by President Joe Biden.
Boaz Sobrado, an analyst in fintech data based in London, said that embracing crypto is historic. He spent four years in Cuba working in crypto.
“This is a conservative government that still follows traditional Marxist principles. Che Guevara founded the communist Cuban central banking. Boaz stated that the fact they regulate cautiously shows their interest in what it could bring,
According to Dr. Mrinalini tankha, a professor at Portland State University of Anthropology, sending and receiving money between the U.S.A and Cuba has become extremely difficult under Trump’s administration. Tankha is a ten-year-old researcher on Cuba.
Western Union, an important channel for remittances, had been operating in Cuba since more than 20 years. In 2020, it closed all 400 of its locations. This was amid increasing Trump-era sanctions.
Covid-19 made it even more difficult to get money in and out of the country.
Tankha stated that some Cubans would use semi-formalized and underground courier services called Mulas to get cash to Cuba before the Covid epidemic. She said that cash was not an easy path after the pandemic, which grounded all flights.
Experts believe it was the desperate need for cash against a background of a global pandemic, and restricted access to the world’s economy that led to a rise of crypto adoption in Cuba.
Tankha stated that there is a niche group of people who are interested in cryptocurrency.
She attributes the growth of the crypto community to the rise in internet connectivity in Cuba. The appeal of bitcoin is likely to be due to the weak local currency.
Cryptocurrency in Cuba is more than just a cross-border transfer. It is also about Cubans seeking to unlock their income-generating potential.
Tankha stated that if you are a software developer or an NFT artist, you can actually get paid with cryptocurrency for your labor. It opens up a new market for Cubans.
Gabriel Guerra Bianchini, a photographer, is doing exactly that. Bianchini, a Havana-based artist, was the first to enter the world of non-fungible tokens or NFTs.
Bianchini said that his first work was sold in six days, for 1.6 ethereum. This is more than making money. This is freedom.
Receiving funds via crypto channels requires creativity because most exchanges require you to know your customer.
Tankha stated that Cubans are at risk if they participate in the ecosystem.
Tankha stated to CNBC that many exchanges continue to geo-block Cubans, even if they are not based in America.
CNBC was informed by experts that mass adoption of crypto is still far off in Cuba.
Although the resolution is a positive sign for Cubans who want to take part in the global economy via bitcoin rails, it is not a warm embrace of crypto. There is a healthy dose caution in the text, with a disclaimer warning citizens of the dangers of virtual assets and ancillary services providers. The government claims they operate at the “margins of the financial system and banking system.”
Sobrado believes that any regulatory attention to crypto is a positive thing.
“Regulators from communist Cuba’s central banks to the SEC are trying to get to grips the cryptocurrency industry. Sobrado stated that this means that crypto is a global phenomenon, and that regulators believe it’s worth engaging with.
“Strongly enough, it’s bringing some kind of legitimacy to this space. He said that it’s become too large to ignore.