Cuba Approves Cryptocurrency Services By Institutions

The Central Bank of Cuba on Tuesday issued regulations for virtual asset service providers.

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The Caribbean island nation had last year given the green light for personal use of cryptocurrencies, a move that some experts argued could help circumvent strict US sanctions.

Cryptocurrencies, which allow financial transactions to be conducted anonymously in a decentralised manner, have been used in the past to bypass funds controls, as well as to make payments and transfers more efficient.

The Banking License, published on Tuesday in the government’s official gazette, requires those wishing to use cryptocurrencies to obtain a license to do so. The bank said it will consider the legality, socio-economic interest and project characteristics of each request before granting a license, which will initially be valid for one year.

The spread of mobile internet three years ago paved the way for cryptocurrency transactions in Cuba and enthusiasts on the island are growing in number as the currencies help overcome the barrier created by US sanctions.

The decades-long US trade embargo cuts Cubans off from conventional international payment systems and financial markets. Cubans cannot obtain credit or debit cards for international use on the island and find it difficult to do so abroad.

“If the central bank is creating a legal framework friendly to cryptocurrencies, it is because it has already decided that it can provide some benefits to the country,” said Pavel Vidal, a former economist at Cuba’s central bank who teaches at Colombia’s Pontificial Universidad Jeveriana Cali.

Several of Cuba’s Latin American neighbors have taken an interest in cryptocurrencies, including El Salvador, the first country in the world to adopt Bitcoin as legal tender.

Vidal said he doubts Cuba will become a new El Salvador by making Bitcoin an official currency or create a cryptocurrency of its own, but rather the government is considering making it easier for remittances and international foreign trade to enter the country.

“This can reduce the cost of these international transactions and create an alternative to dollar transactions that is less sensitive to the declaration regime,” he said.

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