Plagued by serious economic difficulties and increasing use of Bitcoin (BTC), Cuba’s central bank has just authorized cryptocurrency payments. Regulation is also planned. Will Cuba be the next crypto-nation?
Cuba authorizes cryptocurrency payments and announces upcoming regulation
The American continent is decidedly the most conducive to the adoption of Bitcoin (BTC) and other digital assets. While El Salvador is, to date, the only country to have made BTC a legal tender, Cuba is the latest in a long list of countries to make provisions for cryptocurrencies.
This Thursday, August 26, the Cuban government announced it would allow payments in cryptocurrencies. In a country where information is not always easy to obtain, the source is official and comes from Resolution 215 of the Official Gazette of Cuba.
Resolution 215 is scheduled to go into effect on September 15. Cubans will then be able to use “certain” crypto-assets for commercial transactions and obtain licenses authorizing operations related to exchange, payment or storage activities.
In short, in order to be able to offer the purchase and storage of digital assets in Cuban territory, it will be necessary to obtain an authorization license. Furthermore, the pronoun certain does not specify whether the government will choose one cryptocurrency more than another or, rather, whether it is an editorial blunder.
After the authorization of cryptocurrency payments, Cuba wants regulation
Resolution 215 is not only related to cryptocurrency payments. In fact, it is expected that the Central Bank of Cuba will regulate the use of digital assets on the island. Already mentioned above, the requirement to obtain a license for certain services is a draft of this upcoming regulation.
Not really surprising, the resolution also states that the use of crypto-assets cannot involve illegal activities. The contours of the future regulation remain unclear, but it is safe to assume that it will simply limit payments to certain sectors.
The government has understood that the use of BTC is becoming increasingly important in Cuba. Besides, the resolution clearly mentions that this authorization of cryptocurrency payments is taken for simple socio-economic reasons.
An authorization of cryptocurrency payments while Cuba’s economy is suffering
Coming from a regime that is still openly Marxist, the 215 resolution has something to surprise the island’s specialists, especially when you know that it was Che Guevara who created the central bank of Cuba. Nevertheless, the Cuban economy has opened up in recent years and the government is being pragmatic.
Above all, we must not forget the disastrous economic situation of the island. The Covid-19 pandemic has considerably reduced the number of tourists on the island, one of the main sources of income in Cuba. In addition, the U.S. embargo, which dates back to the 1960s and has been reinforced under the Trump presidency, is hurting more and more.
While rationing is still in effect in Cuba and shortages are increasing, there have been unprecedented protests this summer. The population has less and less confidence in their regime and the future, and is increasingly turning to cryptocurrencies.
In particular, sending money from the United States has become very difficult or expensive, as the U.S. dollar has become pariah on the island. It is the crypto-currencies that have taken over and are helping to improve the living conditions of some families. In particular, Tether (USDT) is used to replace the dollar for these types of transactions.
Nevertheless, if Resolution 215 is a good thing, it is still far from a Bitcoin law like in El Salvador. Indeed, it specifies that crypto-assets are risky and that they evolve on the fringe of the financial system, a surprising remark for an anti-capitalist government. We will therefore follow with attention the real application of this resolution in Cuba.
