As per resolution 215 published on Thursday Cuba’s government said in its state-run Official Gazette that it would “recognize and regulate” Bitcoin and other cryptocurrencies for payments on the island.

The country’s central bank is drafting legislations and will set new rules for how to deal with digital currencies. Now a license to continue operations connected to virtual assets will need to be given to commercial providers of related services from the central bank.

Reasons for taking this step by Cuba’s government

 The citizens were facing harder to use United States dollars for purchases. Temporarily the country had to stop accepting cash bank deposits in U.S dollars due to stringent rules and restrictions set by former United States President Donald Trump and current President Biden has increased pressure on Cuba’s government. In 2020, Western Union, an American multinational financial services company, operating a particularly significant channel for remittances in Cuba for more than 20 years, closed all its locations numbering to more than 400, due to increasingly aggressive sanctions done during Trump tenure. The process of getting money into and out of the country was made even more complicated by the Covid-19 pandemic. As per report, before the Covid outbreak, to carry cash to Cuba and distribute it to people on the island some Cubans use semi-formalized courier services called mulas. Later due to pandemic flights around the world were cancelled lead difficulty to cash this way.

Due to rise of the internet in Cuba there was rise in crypto community. Also rise in number of people having smartphones and 3G connectivity contributing to the appeal of bitcoin. The weak local currency is also a factor for this.

Other country planning to change cryptocurrency regulation

Next month, struggling economies, El Salvador will also start adopting Bitcoin (BTC) as legal tender alongside its main currency, the U.S. dollar.

Politicians in several other Latin American countries including Paraguay, Mexico, and Panama have showed interest in introducing cryptocurrency in their countries.

Indrani bose

CBW - External Analyst

INDIA