Cuba has turned to cryptocurrency to make payments and purchases in countries with which it struggles to conduct international trade.
Crypto to avoid US sanctions
Due to restrictions on the country’s traditional means of payment imposed by US sanctions, digital assets are increasingly being used by Cuban citizens as an alternative welfare tool.
More than 100,000 Cubans reportedly use cryptocurrencies as a means of exchange, as U.S. sanctions limit the country’s traditional payment channels. This is an important sign as access to the internet is limited in this country.
Cuba and the crypto market
NBC News recently interviewed Nelson Rodriguez, a Cuban cafe owner who now accepts both Bitcoin and Ethereum for payments. He stated that he believes in cryptophilosophy, which is often associated with ideals of free enterprise, property rights, boundlessness and resistance to censorship.
In Cuba, there is a government supported by a communist party. Citizens cannot use internationally accepted debit and credit cards due to US sanctions. Paypal, Revolut and cell are banned in the region.
The benefits of crypto
The Central Bank of Cuba has announced that from this month it will issue licenses to individuals and organizations providing digital asset services. Eight months ago, the Cuban president announced that cryptocurrencies would be legalized for payment transactions in the country.
According to Rodriguez, digital currencies mean that payment service providers are no longer needed for trading. Although they have banned the use of bitcoin, their influence on the technology is negligible.
positions and interviews
Blockchain technology is not only used to make payments easy and fast. It is also a way of storing information without anyone noticing. International banks have found it lucrative to deal with because of its excellent security and wide range of options.
Dr Emily Morris, an economist at University College London, said it is hardly surprising that the Cuban people are turning to cryptocurrencies. He said:
If you can make transactions directly between two parties who do not have to go through a bank, then that would be interesting.
News channel NBC also interviewed Ernesto Cisneros, a Cuban musician who turned to near-fungible tokens after his business collapsed due to COV-19 restrictions. He now stores his music, videos and photos on the blockchain and sells them online for money.
Do cryptocurrencies ease sanctions?
In the context of geopolitical sanctions and trade embargoes, several governments have sought to block the use of cryptocurrencies in their countries. But as demonstrated by recent US sanctions against Russia, cryptocurrency can be used tactically to circumvent such trade embargoes.
Binance CEO Changpeng Zhao has also stated that it is a myth to use cryptocurrencies for sanctions. He said:
Cryptocurrencies are too traceable. Governments around the world are increasingly becoming very good at tracking crypto transactions.