A resolution published in Cuba’s official state-run Gazette, the central bank has indicated that it will enforce new rules concerning digital currencies and will require businesses to acquire licenses from the Central Bank in order to continue with crypto-related operations.
Following this resolution, Resolution 215, citizens and businesses will now be able to legally use cryptocurrencies as a method of payment in the country.
Crippling US Sanctions for Cuba’s Economy
There have been several American sanctions against the communist country, which have forced Cuba’s economy into recession. The decision to follow El Salvador, which recently passed a bill in parliament to have Bitcoin (BTC) become legal tender in the country, could help Cuba to circumvent the US sanctions.
The sanctions which were imposed by the previous President have been extended by the current President, Joe Biden and cryptocurrencies could be the easiest way out of this financial situation for the country.
“This is a conservative government still set in traditional Marxist ways. In fact, the communist Cuban central bank was founded by Che Guevara. The fact that they are cautiously regulating shows they are interested in what it can bring them,” Boaz, fintech data analyst in London who worked in Cuba said.
Under the regime of President Donald Trump, sending and receiving money between the US and Cuba became extremely difficult and cryptocurrencies could open a new front for people to transfer funds between the two countries.
In 2020, Western Union, which had been operating in Cuba for over 20 years, shut down all of its 400+ outlets in Cuba, making things even more complicated for transferring funds.
Covid-19 Deteriorated The Situation
The situation deteriorated even further following the impact of the COVID-19 pandemic, which has affected every economy in the world.
Before the Covid-19 pandemic, some Cubans would use semi-formalized courier services, natively referred to as mulas where agents would bring money into Cuba and distribute it amongst people, but all this was brought to a halt by the pandemic.
A Weak Local Currency Alongside The Use Of Crypto
Amidst all those woes, it is the local currency that has taken the biggest hit and its value has rapidly decreased over the years; and this would likely have been a factor that contributed to the appeal to use cryptocurrencies, such as Bitcoin.
By now, a good number of Cuban citizens own smartphones and there is good 3G connectivity throughout the country – and even before the central bank had published the resolution, Cubans had already turned to crypto. But it was still a tough product to use, since most exchanges require users to comply with Know-Your-Customer (KYC) guidelines and many exchanges, including those based outside the US still geo-block Cubans.
Whilst experts predict that there’s a long journey ahead before the mass adoption of cryptocurrency in Cuba, the resolution is promising for Cubans who are keen on getting involved in the crypto field.