Bitcoin can now be legally used for payments in Cuba

Key facts:

  • Central Bank warns that individuals assume the risks of trading cryptoassets.
  • State banking regulator grants legitimacy over the use of digital assets.

Resolution 215/2021 of the Central Bank of Cuba (BCC), which recognizes bitcoin (BTC) payments and other cryptocurrencies on the island, has entered into force this Wednesday, September 15, after its publication in the Official Gazette last August 26. The implementation of this new regulatory framework also establishes the licensing of digital asset service providers operating throughout the national territory.

As detailed by the BCC, the purpose of this new regulation is to enable the use of “certain virtual assets in commercial transactions”. It also clarifies that it is the only entity that authorizes financial institutions and other legal entities to use cryptoassets among themselves.

Bodies of the Central State Administration, political and social organizations and other institutions will not be able to use digital assets without the authorization of the Central financial entity.

According to what is stated in the regulation, the country will comply with international standards on prevention and detection of money laundering and financing of terrorism established by the Financial Action Task Force (FATF).

Cryptocurrencies pose risks: Cuba’s main concern

The BCC resolution warns those who decide to use cryptocurrencies that they represent “risks for monetary policy and financial stability, due to their high volatility.” It also warns that these are assets “without the backing of monetary authorities” and “excessive anonymity of registered users”.

These concerns seem to be the main factors driving the regulation. In fact, the Cuban media mentioned a warning issued last May by Cuban President Miguel Díaz Canel. On that occasion he made reference to operations with cryptocurrencies that seek to maximize profits under schemes that could be fraudulent.

“The country has been evaluating the convenience of the use of cryptocurrencies to make the pertinent decisions. Now, what we are doing is preventing our population from being swindled by a group of facts that are happening worldwide,” Díaz Canel mentioned as reviewed in the publication.

As reported by CriptoNoticias, the BCC communicated in August its decision to regulate the use of “certain virtual assets in commercial transactions” throughout the country’s territory. However, the resolution leaves several aspects unclear, such as which cryptocurrencies may be used and which may not, as well as the quotation to be taken into account for operations.

Bitcoin can ease remittance pain for Cubans

The Communist Party of Cuba (PPC) had reported in April its decision to include bitcoin in the new economic guidelines for the period 2021 – 2026. On that occasion, a state official reported that the Caribbean nation will study the use of cryptocurrencies “in the current conditions of the economy”.

So far there is no certainty whether this study has been carried out or not, but a recent publication by U.S. economist Steve Hanke shows that Cuba is among the nations that can profit from bitcoin. It is because the Caribbean country has the highest average commission payment for sending remittances, which is on the order of 10.53%.

In Cuba, remittances are the main source of income for the population. They are the result of the efforts of tens of thousands of exiles who send money to their relatives on the island to help them cover basic needs. In any case, bitcoin offers a fast and inexpensive way to send cross-border transfers without having to resort to high-cost traditional services.

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