- L Misthos and M Bacina
Cuban Currency Solution: Cuba to Recognise Cryptocurrency
Updated: Sep 9, 2021
The Republic of Cuba has announced it will begin recognising and regulating cryptocurrencies. Resolution 215, published in the country's Official Gazette, indicates the Central Bank of Cuba will set new rules governing the use and monitoring of digital currencies. Service providers of digital currencies already in operation are required to obtain licensing from the bank to continue operations.
The announcement cites "reasons of socioeconomic interest" as the driving force behind the decision. It is likely that the US embargo over the Cuban Government, which prevents American or America-based business from conducting trade with Cuban interests, has encouraged this decision.
As a result, Cuba joins El Salvador in the region showing greater acceptance of blockchain and decentralised finance (DeFi), which may seem to permit bypassing of US restrictions and re-establish a flow of money into the country due to the peer-to-peer nature of public blockchain systems. Sending and receiving money to and from Cuba has has been difficult as a result of the US sanctions, however, the COVID-19 Pandemic presented new challenges for financial operations in the country.
As we regularly note, however, given the traceable nature of blockchain systems, it would be a brave US citizen who chooses to flout the sanctions and use blockchain to transact business with Cuba, as the record of transactions is immutable and may well be traced back in due course.
Cuba has assured the operations and implementation of cryptocurrency will be controlled and monitored to prevent illegal activity. How the US reacts to this potential threat to their embargo remains to be seen.