Cuba's central bank now recognizes cryptocurrencies like bitcoin

On July 11, 2021, thousands of Cubans marched through Havana chanting "Down With the dictatorship" as well as "We Want Liberty".
Cuba will now recognize and regulate cryptocurrency like bitcoin.

The state-run Official Gazette published Resolution 215, Thursday, stating that the central bank will establish new rules regarding the handling of digital currencies. To continue their operations, commercial providers of similar services will need to obtain a license from central bank.

Cuba has been a pariah of the global economy due to the American embargo against the communist state. Cuba's decision that it will join El Salvador in accepting decentralized virtual money could allow the country to bypass the U.S. sanctions regime. This was initiated under former President Trump, and extended by President Biden.

Boaz Sobrado, an analyst in fintech data based in London, said that "It is historic that they are adopting it." He spent four years in crypto in Cuba.

"This conservative government is still set in Marxist tradition. Che Guevara founded the communist Cuban central banking. Boaz continued, "The fact that they are cautiously regulating is a sign they are interested in the potential it can bring to them."

According to Dr. Mrinalini tankha, a professor at Portland State University of Anthropology, sending and receiving money between the U.S.A and Cuba has become extremely difficult under Trump's administration. Tankha is a ten-year-old researcher on Cuba.

In 2020, Western Union, a significant channel for remittances and a long-standing presence in Cuba, will close all 400 of its locations. This was in response to Trump's increasingly harsh sanctions.

Covid-19 made it even more difficult to get money in and out of the country.

Tankha stated that before the Covid epidemic, some Cubans would use underground, semi-formalized courier companies called mulas to get cash to Cuba. These agencies would then distribute the cash to the people of the island. She says that this route to cash became more difficult as the pandemic halted flights all over the globe.

Experts believe it was the desperate need for cash in the face of a global pandemic that led to blocked access to world economies and a lack of liquidity that caused the rise in cryptocurrency adoption in Cuba.

Tankha stated that there is a niche group of people who are interested in cryptocurrency.

She attributes the rise in crypto communities to the rise in internet connectivity in Cuba. The appeal of bitcoin is likely to be due to the weak local currency.

Cryptocurrency in Cuba is more than just a cross-border transfer. It is also about Cubans seeking to unlock their income-generating potential.

Tankha stated, "If you are a software developer or an NFT artist you could actually get paid via cryptocurrency for your labor." It opens up a new market for Cubans to take part in.

Gabriel Guerra Bianchini, a photographer, is doing exactly that. Bianchini, a Havana-based artist, was the first to enter the world of non-fungible tokens or NFTs.

Bianchini said that "My first work was sold in six days" for 1.6 ethereum. This is more than making money. This is freedom.

Receiving funds via crypto channels requires creativity because most exchanges require you to know your customer.

Tankha stated that Cubans are at risk if they participate in the ecosystem.

Tankha told CNBC that many exchanges continue to geo-block Cubans, even if they are not based in America.

CNBC hears from experts that mass adoption of crypto is still far off in Cuba.

Although the resolution is a positive sign for Cubans who want to take part in the global economy via bitcoin rails, it is not a warm embrace for all things crypto. There is a healthy dose caution in the text, including a warning about the dangers of virtual assets and ancillary service providers. The government claims they operate at the "margins" of the financial and banking system.

Sobrado believes that any regulatory attention to crypto is a positive thing.

"Regulators from communist Cuba's central banks to the SEC are working together to understand the cryptocurrency industry. Sobrado stated that this means that crypto is a worldwide phenomenon and that regulators believe it's worth engaging with.

"Strangely, it's bringing some kind of legitimacy to this space. He said that it's become too large to ignore.