Due to US sanctions limiting the island nation’s capacity to conduct foreign trade, cryptocurrency has become particularly appealing.
Cryptocurrencies increasingly used by Cubans as a medium of exchange. This is due to the country’s traditional payment rails restricted by US sanctions. Over 100,000 Cubans said to be exploiting digital assets, thanks to the arrival of mobile internet barely three years ago.
Cuba’s Digital Currency Economy
Nelson Rodriguez, a Cuban cafe owner who now accepts both Bitcoin and Ethereum, recently interviewed by NBC News. He claims to believe in crypto’s “philosophy,” which includes free-market ideas, property rights, borderlessness, and censorship resistance.
Cuba, on the other hand, rules by the Communist Party. Due to American sanctions, residents are unable to use globally approved debit and credit cards. In the region, Paypal, Revolut, and Zelle are all prohibited.
The Cuban central bank, on the other hand, said this month that it will begin giving licenses to virtual asset service providers. Eight months previously, the Cuban President said to be looking into making cryptocurrency payments legal.
As Rodriguez noted, digital currencies eliminate the need for payment service providers, making their prohibitions obsolete.
Given that multinational banks detected dealing with it face fines of hundreds of millions of dollars, the technique is revolutionary for the region. As a result, even if the Cuban government has the funds necessary for a transaction, making payments is a huge challenge.
It’s not unexpected, according to Dr. Emily Morris, an economist at University College London, that Cubans are turning to cryptocurrency. She stated that it would interest if transactions could directly go between two parties without having to go through a bank.
Ernesto Cisneros, a Cuban musician turned to NFTs when his livelihood ruined by Covid 19 epidemic restrictions. He now keeps track of his songs, films, and images on a blockchain and sells them online.
Since the United States sanctioned Russia in February, countries have been closely examining cryptocurrency’s potential in circumventing sanctions. Small Cuban coffee businesses may be able to circumvent these prohibitions by employing cryptography. Chainalysis, on the other hand, says that this isn’t feasible for alternative national governments.
Changpeng Zhao, the CEO of Binance, has also indicated that using cryptocurrency for sanctions is a fallacy. Cryptocurrency, he claims, is too traceable. Governments all across the world are getting better at tracking cryptocurrency transactions.