Cuba opens the door to cryptocurrencies by setting out rules and plans for their use

August 27, 2021

Cuba opens the door to cryptocurrencies by setting out rules and plans for their use

A woman walks by a poster of Cuban late leader Fidel Castro -who would have turne 95 today- in Havana, on August 13, 2021 — Photo by YAMIL LAGE/AFP via Getty Images

Cuba sets out rules for use of digital currencies, including licenses for payments service providers and crypto exchanges.
Crypto transactions must be carried out only between financial institutions and those permitted by law, a Thursday resolution said.
Cuba's central bank can authorize the use of crypto in the country's "socio-economic interest," it said.
Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cuba's government will recognize and regulate the use of cryptocurrencies in commercial transactions, including by providing licenses to payments providers and crypto exchanges.

The country's central bank will set these rules for digital assets, according to a resolution published in Cuba's Official Gazette Thursday. It will also be responsible for determining who should get the licenses, guided by the "socio-economic interests" of Cuba.

Cryptocurrencies are the "digital representation of value that can be traded or transferred digitally and used for payments or investments," according to a translation of the Spanish document.

The licences for virtual currency service providers will cover crypto exchanges, for both digital assets and legal tender. Companies that offer custody and administration of crypto, or transfer services, also fall under this measure.

The move opens the door to businesses and people who want to use digital assets in Cuba within an official, regulated framework. Cryptocurrencies have a reputation as free of state oversight, making their owners difficult to track - which some believe makes them popular with people trying to get around US restrictions on remittances to Cuba.

Once authorized, financial institutions and others will be able to use crypto to carry out monetary and commercial operations, and to satisfy financial obligations, the resolution said. But administrative agencies in the Cuban government should avoid this kind of activity, it noted.

The resolution warned people participating in crypto transactions that they take on the risks from operations outside the traditional banking and financial system, "even though transactions with virtual assets between these persons are not prohibited."

As the central bank is taking on cryptocurrency management, that implies risks to financial stability because general decentralization causes high volatility, the resolution said. Further, the anonymity of users on registered networks also poses risks to financial crime, it noted.

The Central American nation of El Salvador became the first country to recognize bitcoin as legal tender in June, via a law that comes into effect on September 7.

"We may not quite be at the moment where everyone uses them every day, like with fiat currencies," Diane Dai, co-founder of decentralized exchange platform DODO, said, on cryptocurrencies' big moves into the mainstream.

"But we're at a time in which people everywhere, across nearly every country, are aware and engaged with the concept of cryptocurrencies. And, in some countries, usage of cryptocurrencies is far further advanced than in North America and other Western economies."

Read the original article on Business Insider