Cuban Central Bank Is Preparing to Regulate Cryptocurrency

Key highlights:

• Cuba's central bank says that it will be recognizing and regulating cryptocurrency
• Legal entities and institutions will be able to conduct cryptocurrency transactions, but only with the proper authorization
• Cryptocurrency are already gaining some traction with tech-savvy groups in Cuba

Cuba's central bank moves to regulate cryptocurrency

Cuba’s central bank is establishing a framework for recognizing and regulating cryptocurrencies. The Central Bank of Cuba says that it could authorize the use of certain crypto assets to facilitate commercial transactions, and provide licenses to cryptocurrency service providers.

Under the proposed rules, the central bank would have the power to authorize financial institutions and legal entities to conduct crypto asset transfers. Per CoinDesk, the use of cryptocurrency can be allowed for “monetary and mercantile operations, and exchange and swap transactions, as well as to satisfy pecuniary obligations”. 

Even though the Central Bank of Cuba is (at least partially) recognizing cryptocurrencies, the institution did note that crypto assets pose financial stability and monetary policy risks due to their high volatility. The central bank also claims that the anonymity provided by cryptocurrencies brings risks of these assets being used to facilitate crime.

According to the Associated Press, cryptocurrencies are already popular in Cuba among the country’s more tech-savvy population. Cryptocurrency can provide an alternative currency to US dollars, which are much harder to use in the country due to stricter embargo rules that came into effect under the Trump administration in the United States.

Another Latin American country, El Salvador, is embracing cryptocurrency much more openly than Cuba. Earlier this year, the country passed a law designating Bitcoin as legal tender. The new “Bitcoin law” will come into effect on September 7, when BTC will officially join the US dollar as legal tender in the country.

While there has been some confusion surrounding El Salvador’s move towards Bitcoin, the country’s president Nayib Bukele says that citizens will not be forced to accept Bitcoin if they can’t or don’t want to. Still, the country is incentivizing adoption by giving away Bitcoin to citizens who set up the government’s official cryptocurrency app, Chivo.