Cryptocurrencies in Cuba: innovations and opportunities

How is the Cryptocurrency Market in Cuba?

HAVANA, Oct. 31st. In August 2021, the Gaceta Oficial published Resolution 215/2021 of the Central Bank of Cuba (BCC), the first regulation for the use of crypto assets in Cuba. It established the authority of the said institution to grant licenses to virtual asset service providers in and from the national territory and to authorize their eventual use in commercial transactions for reasons of socio-economic interest.

The use of crypto assets by financial institutions and legal entities, in general, to carry out monetary-commercial operations would also be subject to prior authorization from the BCC.

In turn, it is indicated that “the organizational units of the Central Bank of Cuba…disclose for preventive purposes the intrinsic risks of the unauthorized use of virtual assets and their services, as well as the legal consequences derived from it, in the civil, administrative and criminal order,” and that although transactions with virtual assets are not prohibited by individuals, they “assume the risks and responsibilities derived in the civil and criminal order from operating with virtual assets and virtual asset service providers that operate outside the Banking and Financial System.”

The consequences of using unauthorized service providers are not made explicit in the document. The practical application and probable future complements will end up clarifying the implications of part of the content of the Resolution.

In any case, the challenges transcend the monetary and financial spheres and impose regulatory challenges associated with controlling tax evasion, combating money “laundering,” foreign currency flight, adverse selection problems and moral hazard in the choice of suppliers.

(for individuals, companies and policymakers), the reproduction of inequities, and the dynamics of exclusion due to insufficient financial education and technological literacy. However, the aforementioned problems are not exclusive or inherent to the use of cryptocurrencies, although their nature will require specific analysis, regulations and policies.

An important exercise is the identification of areas of the confluence of interests between the uses that various social and entrepreneurial groups have given cryptocurrencies in the Cuban context, and those pursued by the authorities. An analysis of everyday practices suggests that these areas can be very diverse and interconnected:

    • Remittances and “self-sent” transfers from investments in crypto assets: they have facilitated the emergence of new sending routes that circumvent current restrictions, favour the diversification of providers, increase competition and decrease transfer/monetization costs for individual senders and those who receive the funds in Cuba. In the case of international transactions that fund accounts in freely convertible currency, they guarantee individuals formal access to the currency and greater transparency in the origin of the funds that support the account balance and consumption.
    • Increased income: Increases the individual budget and consumption options, facilitates access to the most restrictive foreign exchange market. Formal monetization in freely convertible currency contributes to the personal budget, while guaranteeing “quality” income to the country, and maintains the funds of individuals in “defined-purpose” accounts (final consumption circuit in foreign currency, import of final goods, inputs and capital through state intermediaries) with a negligible possibility of cash extraction and subsequent capital outflow abroad under current conditions.
    • Financing for productive reactivation: The increase in personal income stimulates the demand for goods and services from the public and private sectors. Beyond this, a contribution to the reactivation of the private sector from the point of view of financing is to be expected.

It is very likely that the destinations of remittances in crypto follow patterns close to traditional flows, frequently destined for investments and working capital1; that part of the return on investments in digital assets is redirected towards investments in the real sector; and that a new channel is opened for foreign investment that occurs between non-formal partners.

In the context of the ongoing opening, innovative financing mechanisms take on special importance because, although the authorities promote an increase in the contribution of the private sector, the fiscal resources that could underpin them are extremely depleted.

  • Diversification of collection and payment mechanisms: In a situation of capital controls and limited international means of payment, cryptocurrencies offer the possibility of independently consuming goods and services online and during trips abroad. Sometimes, this favours the funding of traditional means of payment, operative in Cuba and abroad. This is particularly important for entrepreneurs to access inputs and means of production, as well as for the reception of payments from abroad, that face numerous banking restrictions and high costs derived from restrictions imposed by the blockade.
  • The hard currency is preserved for national priorities: Consumption online and abroad with cryptocurrencies favours the permanence of the foreign exchange in the country since it is the cryptocurrencies that are physically or virtually across national borders. Part of this consumption actually increases the currency under the direct control of the authorities, such as cell phone recharges or online purchases in the local freely convertible currency circuit.
  • Fintech development: These ventures are developed locally, or abroad, with the Cuban market as a target, and probably calling for a qualified local workforce. They contribute to the reduction of transfer costs, as well as to the innovation associated with new means of collections and formal payments and their generalization.


Part of the uses and opportunities described above do not necessarily imply a pure convergence of interests between individuals/private sector and the authorities, but the latter could develop regulatory actions aimed at reinforcing the positive aspects and minimizing the adverse — or less convenient — effects to the parties or the general welfare.

The observation of innovations and practices already underway, and the intuition of aligned (or alignable) interests in various fields, suggests the possibility of policy interventions that enhance the positive effects of the growing incorporation of the use of cryptocurrencies in Cuba.

This goes through a continuous update and clarification of the regulatory content; through the exploration of mechanisms for attracting and using crypto in domestic and international transactions by state operators; through the establishment of specific mechanisms and incentives for directing cryptocurrency flows towards investments in the real sector; through promoting the formalization of providers (state, private, joint) of services associated with digital assets that offer formal exchange operations of decreasing cost, contribute to the transparency of operations, and the reduction of risks of informal exchange.

The platforms Enzona, Transfermóvil and the announced ETECSA Wallet constitute initiatives from the state sector that could experimentally venture into the field of cryptocurrencies on the island. They could, in turn, partner with private sector entrepreneurs, some with a well-travelled path and experiences to contribute beyond the “user level.”

For alliances, it would be appropriate, in turn, to consider a relaxation of the prohibitions of the list of activities prohibited to the private sector and avoid their discrimination as suppliers, since Section J of the National Classifier of Economic Activities is restricted to non-state forms, which includes “Financial and insurance activities” (monetary and financial intermediation, securities purchase operations, fund management, etc.).

If the current situation of the country is assessed, immersed in a crisis of critical proportions resulting from the delay in economic policies aimed at the active transformation of the economic model, and by a persistent economic blockade whose restrictive influence on Cubans living in Cuba (and sometimes, on those who live outside) transcends their interactions within national borders, various opportunities associated with the use of cryptocurrencies can be appreciated.

The innovations generated in the practices of the population, the private sector, and domestic operators (formal, informal, in grey areas) or “foreign” oriented towards Cuba, and the identification of areas where private and national interests converge, seem to configure a target for specific policies with emphasis on areas of financing mechanisms, access to foreign exchange, and productive reactivation processes.

The usefulness of cryptocurrencies has transcended the “conditions of necessity” that gave rise to their local emergence. Appealing to an exercise of imagination, in the study (Curtin, 2021) respondents were asked if they would stop using crypto assets if the landscape of narrowness that led them to venture into them for the first time were transformed.

They were placed in a context of access to traditional formal local financial investment options, extensive credit options in the banking sector, unprecedented expansion of activities available to private enterprises, normalized remittance flows, and non-vetoed access to Cubans to foreign exchange markets on international platforms. In a categorical way, all of the respondents answered that they would continue to use cryptocurrencies.

Given the growing popularity of the use of crypto assets, their nature, and the solutions they offer to Cubans, prohibiting their use or ignoring the growing phenomenon do not seem to constitute valuable options for the authorities.
It is necessary to face regulatory challenges and instead design mechanisms that favour the channelling of flows related to cryptocurrencies towards the country’s growth and development objectives.
(First published in Oncuba)