The Government of Cuba has announced that it will recognize cryptocurrencies for payments on the island. Resolution published in the Official Gazette said the Central Bank would establish rules for these currencies and determine how to license-related service providers within the country.
The popularity of cryptocurrencies in Cuba stems from the difficulty for citizens to use dollars, in part due to the stricter embargo rules imposed by former President Donald Trump. Cuba is the second Central American nation to signal with legal recognition of cryptocurrencies. El Salvador recently announced that it would recognize the use of bitcoin as legal tender to encourage international remittances from its citizens living abroad.
Cryptocurrencies in Cuba driven by socioeconomic interest
The resolution says that the Central Bank can authorize the use of cryptocurrencies “for reasons of socioeconomic interest”, but with the state ensuring that their operations are controlled. It also explicitly noted that the operations could not involve illegal activities.
A local cryptocurrency expert, programmer Erich García, told ABC News that some Cubans already use cryptoassets, usually through gift cards, for online purchases.
Bitcoin as an alternative to the dollar’s sphere of influence
Cryptoassets have been used in countries where the population faces difficulties using fiat money freely, especially for international remittances. And they have also been used to challenge the dollar standard and become less dependent on US banks.
By turning bitcoin into a legal tender, Central American countries are allowing bilateral trade, international transfers, and economic arrangements to move out of the dollar’s sphere of influence under a context of technological innovation without being a reproach to the dollarized financial legacy.