Cuba plans to recognize and regulate crypto and allow digital currencies to be used for payments in a move that could help the island nation bypass U.S. sanctions, the communist government said last week.
A resolution published in the Official Gazette on Thursday said Cuba’s central bank plans to set rules on cryptocurrencies and determine how to license crypto-related services there.
Earlier this year, a local publication reported that Cuban President Miguel Diaz-Canel was looking into the “convenience of using cryptocurrencies for economic operations”.
Diaz-Canel told the country’s governors during a virtual meeting that adopting and using cryptocurrencies could provide some relief from Cuba’s endemic fiscal deficit.
The move to allow cryptocurrencies as legal tender has been well received by Cuba’s tech-savvy population. The country’s banks had to temporarily stop accepting cash deposits in U.S. dollars after former U.S. President Donald Trump tightened restrictions, making it harder for Cubans to use the U.S. currency.
This came in the midst of the covid-19 pandemic, which has impacted the global economy unequally and has been more difficult for the resilient Cubans.
Some people expected President Joe Biden to normalize relations with Cuba, as former President Barack Obama did. Instead, Biden has been adamant in imposing further sanctions against Cuban officials following the country’s crackdowns on rare protests there.
Growing discontent in Cuba resulted in unprecedented protests in the single-party, authoritarian regime, where political opposition is prohibited and repressed. President Diaz-Canel blamed the protests on U.S. “economic asphyxiation” and social media campaigns by counter-revolutionaries. President Joe Biden called the protests a “clarion call for freedom and relief”.
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“The opportunistic tightening of the blockade during the Trump government in the midst of the Covid-19 pandemic, makes it even more genocidal,” said Bruno Rodriguez, Cuba’s foreign minister, at a recent protest in Havana.
However, a solution to the combined economic hardships of the pandemic and blockade may be at hand.
Neither the poor internet connectivity on the island nor its technological backwardness have stopped the growing popularity of using digital currencies for remittances, paying bills, or accessing capital.
Due to the imposed restrictions, Cubans do not have the luxury of accessing traditional means of payments such as Visa or Mastercard products.
Additionally, a drop in tourism revenue caused by the pandemic affected those who earned income in dollars on the island.
A growing number of young people found a solution by trading cryptocurrencies, which in turn they save or resell for profit or use for payments, exchanging them for cash that is converted into remittances and delivered to recipients through transfers from their mobile phones or money orders.