Strict US sanctions curtailing Cuba’s ability to conduct international trade have led to over 100,000 Cubans turning to cryptocurrency as an alternate pathway to financial freedom.
Businesses Chose Crypto
The US sanctions imposed on the Communist-run country of Cuba prevent the use of internationally accepted debit and credit cards. Online payment channels like Paypal, Revolut, and Zelle are also banned in the country. Therefore, a significant chunk of the population, feeling the restrictions on the imposed sanctions, has chosen cryptocurrency as an alternative means of transaction. These Cubans, which include many small business owners, have benefited from the advent of mobile internet that reached the country only three years ago. The spread of smartphones and mobile internet across this island nation has been quite expansive, as it opened up other channels of payment and financial freedom to a primarily unbanked population. Local business owners believe that thanks to digital currencies, their operations are no longer dependent on payment service providers, which ultimately renders all bans inconsequential.
Dr. Emily Morris, an Economist from University College London, believes that the fact that Cuban citizens are turning to crypto does not come as a surprise. She stated,
“If you can do transactions directly between two parties which don’t have to go through a bank, then that would be of interest.”
Crypto Regulations In Cuba
The previous lack of regulations in the country had resulted in a spike in crypto activity, especially during the initial months of the pandemic. Local crypto exchanges noted an influx of customers, almost doubling on a monthly basis. Back in 2021, there was talk of the Cuban government investing in cryptocurrency. Soon after it was announced that the Cuban central bank would be undertaking the mission to explore crypto regulations. The bank would also establish a plan of action to register and license crypto service providers in the country. It was also revealed that crypto payment authorizations would only be granted in matters of “socio-economic interest,” in order to oversee all crypto operations and prevent illegal and fraudulent activities.
Earlier this month, the Cuban central bank announced its intentions to put in place a regulatory framework for digital assets, starting with a compulsory license for virtual asset service providers. The country’s central bank has already issued a Central Bank Digital Currency (CBDC). The Cuban President, Miguel Diaz-Canel, had also voiced his favorable opinions about the industry and had been reportedly examining the legalization of crypto payments. This has led to speculation that Cuba might be following in the footsteps of El Salvador, the Latin American country that had adopted Bitcoin as legal tender.