Cuba has announced that it will recognize — and regulate – cryptocurrencies for payments on the island, potentially allowing it to avoid US sanctions.
The central bank will create regulations on cryptocurrencies and determine how to license suppliers of related services within the communist state, according to a resolution published in the Official Gazette on Thursday.
The news comes as bitcoin has risen in popularity in Cuba among some tech-savvy groups, since it has become increasingly difficult to transmit and spend US dollars on the island, in part due to tightened embargo regulations enforced by former US President Donald Trump.
While some anticipated President Joe Biden to follow in the footsteps of previous President Barack Obama and strive to normalize ties, he has instead taken a tougher stance, slapping further sanctions on Cuban leaders in response to the country’s unusual demonstrations.
El Salvador recently declared that it will acknowledge the usage of the cryptocurrency Bitcoin as a means to boost remittances from its people living abroad, prompting Cuba’s action.
The currencies, which fluctuate in value dramatically, are generally decentralized and rely on widely spread blockchain computer codes to keep track of transactions.
They are popular with those seeking to dodge government laws, such as evading US limits on transferring money to Cuba, since they may be used for long-distance transactions that are allegedly anonymous.
The central bank can approve the use of cryptocurrencies “for reasons of socioeconomic interest,” according to the resolution, with the state ensuring that activities are supervised.
It further stated that no illicit activity may be part of the operations.
Some Cubans are already utilizing such devices, typically via gift cards, for internet transactions, according to a local bitcoin specialist, programmer Erich Garca.