Central Bank Of Cuba Has Begun To Accept Digital Currencies Such As Bitcoin
Cuba's central bank has begun to accept digital currencies such as bitcoin
Due to "socioeconomic considerations," Cuba has announced that it will now recognize and regulate cryptocurrencies such as bitcoin.
New rules for dealing with digital currencies will be established by the central bank, according to Resolution 215, which was published on Thursday in the state-run Official Gazette (official gazette). For the first time, commercial providers of related services will be required to obtain a license from the central bank before they can begin doing business.
In the wake of the United States' embargo against the communist state, Cuba has been branded a pariah state in the international economy. Cuba's decision to join El Salvador in adopting decentralized virtual currency could aid the country in circumventing the United States' sanctions regime, which was ratcheted up under former President Donald Trump and extended under Vice President Joe Biden, according to a report published Monday.
The fact that they're adopting it is historic, according to Boaz Sobrado, a London-based fintech data analyst who lived in Cuba for four years and worked in the cryptocurrency space.
“This is a conservative government that is committed to traditional Marxist principles,” says the president. Che Guevara, after all, was the man who established the communist Cuban central bank. The fact that they are regulating with caution demonstrates that they are concerned about the benefits,” Boaz explained.
According to Dr. Mrinalini Tankha, an anthropology professor at Portland State University who has been conducting research on Cuba for the past ten years, money transfers between the United States and Cuba have become extremely difficult under the Trump administration.
Due to increasingly aggressive Trump administration sanctions, Western Union, a significant remittance channel that had operated in Cuba for more than two decades, closed all of its 400-plus locations in 2020.
Difficulty in Transaction
As a result of the Covid-19 outbreak, the process of bringing money into and out of the country became more difficult.
As Tankha explains, some Cubans relied on underground and somewhat semi-formalized courier services known as mulas, through which agencies transported cash to Cuba and distributed it among island residents prior to the Covid outbreak. However, as a result of the pandemic, which grounded flights around the world, even this route to cash became significantly more difficult, according to her.
In Cuba, experts believe it was the desperate need for cash, combined with the effects of a global pandemic and the country's limited access to the global economy, that fueled the rise in cryptocurrency adoption.
There is a subset of people who have adopted cryptocurrency, as Tankha outlined in his explanation.
In her opinion, the growing crypto-community in Cuba, as well as the growing number of people with smartphones and 3G connectivity, are responsible for the rise of the internet in the country. Another factor that is likely to contribute to bitcoin's popularity is the depreciation of the local currency.
It is possible to use cryptocurrency in Cuba for purposes other than cross-border money transfers. Additionally, it is about Cubans who are looking to increase their revenue-generating potential through various means.
For example, if you're a software developer or an NFT artist, you could potentially be compensated in cryptocurrency in exchange for your work, and I believe that's where the real potential lies, according to Tankha. “It ushers in a completely new economy in which Cubans can participate,” says the author.
Gabriel Guerra Bianchini, a photographer, is currently engaged in just that endeavor. Bianchini, who is based in Havana, was one of the first artists in Cuba to experiment with non-fungible tokens, also known as NFTs. Bianchini was one of the first artists in Cuba to experiment with NFTs.
“In six days, my first piece of work brought in 1.6 ethereum,” Bianchini explained. “It's about more than just making money here. This is the essence of liberty.”
Due to the fact that many exchanges require know-your-customer compliance, even receiving funds through cryptocurrency channels takes some ingenuity and ingenuity.
As Tankha explained, “the moment Cubans enter this ecosystem, they expose themselves to a whole slew of dangers, even if they use a VPN to conceal their location.”
According to Tankha, many exchanges, including those based outside of the United States, continue to geoblock Cubans from using their services.
A long way remains to be traveled before cryptocurrency is widely accepted in Cuba, according to industry experts.
However, while the resolution is a positive step forward for Cubans who wish to participate in the global economy through the use of bitcoin rails, it is far from being a blanket endorsement of all things crypto-related. Despite the positive tone of the text, there is a healthy dose of cynicism, as evidenced by an explanatory disclaimer that warns citizens about the risks associated with virtual assets and ancillary service providers, which are described by the government as operating on "the periphery of the banking and financial system."
Sobrado, on the other hand, believes that any regulatory attention paid to cryptocurrency is a positive development.
In Conclusion
Regulatory agencies around the world, from the central bank of communist Cuba to the Securities and Exchange Commission, are wrestling with the cryptocurrency industry. Sobrado explained that this indicates that cryptocurrency is a global phenomenon, with regulators concluding that it will be around for a long time and is worthwhile engaging with.
The strangest thing about this is that it lends the space some legitimacy. As he put it, "it has grown to be too large to ignore."
