Cuba’s Central Bank issued a series of regulations for bitcoin service providers after giving the go-ahead last year to the personal use of cryptocurrencies, a move that some experts say could help the Caribbean island circumvent tough U.S. sanctions.
The island’s government published in the Official Gazette that as of May 16 it will be possible to grant licenses for businesses or individuals to operate with digital currencies, according to local media on Wednesday. The legalization of these activities goes hand in hand with the so-called Tarea de ordenamiento de 2021, the biggest economic reform undertaken in Cuba in recent years.
Cryptocurrencies, which allow for anonymous and decentralized financial transactions, have been used in the past to circumvent capital controls, as well as to make payments and transfers more efficient.
The banking authorization, published in Cuba’s Official Gazette, requires those wishing to use the coins to obtain a license, which will be granted for one year, and extendable for another year, given the experimental and novel nature of this type of activity.
In a resolution, the Central Bank of Cuba said it would consider the legality, socioeconomic interest and project characteristics of any application before granting a license.
The launch of mobile Internet three years ago paved the way for cryptocurrency transactions in Cuba, and enthusiasts on the island are growing in numbers as the currency helps overcome obstacles created by U.S. sanctions applied to the Caribbean island.
The decades-old U.S. trade embargo excludes Cubans from international payment systems and financial markets. Cubans cannot obtain credit or debit cards for international use on the island and have complications doing so abroad.
“If the Central Bank is creating a favorable legal framework for cryptocurrencies, it is because they have already decided that it can bring benefits to the country,” said Pavel Vidal, a former Central Bank of Cuba economist who teaches at Colombia’s Pontificia Universidad Javeriana Cali.