Now Cuba will recognize and regulate cryptocurrencies like bitcoin, citing “reasons of socioeconomic interest.”
Resolution 215, which was published Thursday in the Official State Gazette, says the central bank will establish new rules for dealing with digital currencies. Commercial related service providers will now need a central bank license to continue operating.
The American embargo on the communist state has made Cuba an outcast of the world economy. Cuba’s decision to join El Salvador in adopting decentralized virtual cash could help the country evade the US sanctions regime, which was agreed under former President Donald Trump and has been extended to the president. Joe Biden.
“It’s historic that they adopt it,” said Boaz Sobrado, a London-based fintech data analyst who has spent four years working in cryptography in Cuba.
“This is a conservative government still established in the traditional Marxist way. In fact, the Cuban communist central bank was founded by Che Guevara. The fact that they regulate with caution shows that they are interested in what it can bring them,” Boaz said. .
Sending and receiving money between the United States and Cuba became extremely difficult under the Trump administration, according to Dr. Mrinalini Tankha, a professor of anthropology at Portland State University who has been researching Cuba for 10 years. .
In 2020, Western Union, a particularly important remittance channel that has been operating in Cuba for more than 20 years, closed all of its more than 400 locations, amid increasingly aggressive Trump-era sanctions.
The process of getting money in and out of the country was made even more complicated by the Covid-19 pandemic.
Prior to the Covid outbreak, Tankha said, some Cubans went to underground and somewhat semi-formalized courier services called mules, where agencies brought cash to Cuba and distributed it to the people of the island. But as the pandemic landed flights around the world, even that path to cash became much more difficult, he said.
It was this desperate need for cash, in the context of a global pandemic and blocked access to the global economy, that helped foster an increase in the adoption of cryptography in Cuba, according to experts.
“There’s a kind of niche sector of people who have resorted to cryptocurrency,” Tankha said.
She credits the growing crypto community for the rise of the Internet in Cuba, as well as the fact that there are so many more people who have smartphones and 3G connectivity. A weak local currency is also a factor that probably contributes to the attractiveness of bitcoin.
The case of the use of crypto in Cuba transcends the cross-border transfer of money. It’s also about Cubans wanting to open up their income-generating potential.
“If you’re a software developer or an NFT artist, you could receive payments through cryptocurrencies for your work and I think that’s where the potential lies,” Tankha said. “It opens a new economy to the participation of Cubans.”
Photographer Gabriel Guerra Bianchini does exactly that. Havana-based Bianchini was one of the first Cuban artists to break into the world of non-fungible chips (NFT).
“My first work was sold in six days for 1.6 ethereal,” Bianchini said. “That’s bigger than making money. That’s really freedom.”
However, receiving funds, even through cryptographic channels, requires some creativity, because many of the exchanges require compliance with the client’s knowledge.
“By the time Cubans participate in this ecosystem, they face many risks, even if they operate a VPN where they can hide their location,” Tankha said.
Tankha told CNBC that many exchanges, including those not based in the United States, continue to geographically block Cubans.
Experts told CNBC that there is still a long way to go to massively adopt cryptography in Cuba.
The resolution itself, while a promising sign for Cubans wishing to participate in the global economy via bitcoin rails, is virtually no warm embrace of all cryptographic things. The text includes a good dose of skepticism, such as a disclaimer that warns citizens about the risks of virtual assets and ancillary service providers, which the government says operate on the “margins of the banking and financial system.”
But Sobrado is optimistic that any kind of regulatory attention regarding cryptography is good.
“Regulators around the world, from Cuba’s communist central bank to the SEC, are trying to deal with the cryptocurrency industry. This means that cryptography is a global phenomenon and regulators have decided it is here to stay. it is worth participating in, ”he said. Sobrado.
“Interestingly it’s bringing some kind of legitimacy to the space. It’s become too big to ignore,” he said.