Crypto has become especially attractive for the island nation due to US sanctions limiting its ability to conduct international trade.
Many Cubans are now using cryptocurrencies as an alternative means of exchange due to limitations imposed by US sanctions on the country’s traditional payment rails. Over 100,000 Cubans are reportedly using digital assets, largely thanks to mobile internet reaching the country just three years ago.
Cuba’s Crypto Economy
NBC News recently interviewed Nelson Rodriguez – a Cuban cafe owner who now accepts both Bitcoin and Ethereum for payments. He said he believes in the “philosophy” of crypto – often associated with free-market ideals, property rights, borderlessness, and censorship resistance.
Cuba, by contrast, is governed by a Communist Party, and citizens are unable to use internationally accepted debit and credit cards due to American sanctions. Paypal, Revolut, and Zelle are all banned in the region.
But not cryptocurrency: The Cuban central bank announced that it would begin issuing licenses to virtual asset service providers this month. Eight months prior, the Cuban President was reportedly examining the legalization of cryptocurrencies for payments.
As Rodriguez explained, digital currencies mean that payment service providers are no longer necessary for commerce, leaving their bans negligible.
The technology is groundbreaking for the region, given that international banks found dealing with it can be fined hundreds of millions of dollars. As such, even if the Cuban government has the money required for a trade, making payments is still an immense challenge.
Dr. Emily Morris, an Economist from University College London, said it’s hardly surprising to see the Cuban population turning to crypto. “If you can do transactions directly between two parties which don’t have to go through a bank, then that would be of interest,” she stated.
NBC also interviewed Ernesto Cisneros, a Cuban musician who turned to NFTs after his business fell apart due to Covid 19 pandemic restrictions. He now stores his music, videos, and photos on-chain and sells them online for money.
A Killer of Sanctions?
Cryptocurrency’s role in bypassing sanctions has been examined thoroughly by governments ever since the US sanctioned Russia in February. Though small Cuban coffee shops may be able to work around these restrictions using crypto, Chainalysis claims that this isn’t viable for alternative national governments.
Binance CEO Changpeng Zhao has also stated that using crypto for sanctions is a myth. “Crypto is too traceable,” he said. “The governments around the world are increasingly very good at tracking crypto transactions.”