HAVANA, May 4th At least 100,000 people are using bitcoin (BTC) and other cryptocurrencies in Cuba. On the island, the adoption of crypto assets is growing as its inhabitants discover the benefits they offer them given the few options they have in the face of the sanctions that the United States has imposed on the Caribbean country.
The recent news that the Central Bank of Cuba (BCC) is legalizing cryptocurrency service providers is well received by the inhabitants.
many applaud the legislation that regulates the granting of licenses to companies that wish to carry out activities related to bitcoin and other crypto-assets.
“If the central bank is creating a crypto-friendly legal framework, it is because they have already decided that it can bring benefits to the country.” This was pointed out to Forbes by Pavel Vidal, a researcher at the Center for the Study of the Cuban Economy at the University of Havana and a specialist at the Central Bank of Cuba.
Since last October, businesses are accepting cryptocurrencies to charge for the goods and services they offer. A reflection of this is El Café Havana, a restaurant located in the country’s capital, where bitcoin and ether (ETH) are accepted. “I like bitcoin because of its philosophy,” the place’s owner, Nelson Rodriguez, told NBC News.
In fact, bitcoin is gaining popularity in a country where the population cannot use other payment systems international, such as PayPal, Revolut, Zelle. They also cannot fall back on many other forms of credit or debit. This is because the sanctions have been the main obstacle to the development of commercial and economic relations in Cuba.
“Making a simple payment is a headache on the island, but no problem,” says Cuban bitcoiner Erich Garcia. For him, bitcoin can solve the problems faced by the inhabitants of Cuba Currently, although things are changing for the better, now that the regulation of cryptocurrencies is underway.
Bitcoin: financial sovereignty for Cuba
What is happening can be interpreted as a script written by bitcoiner and developer Matt Odell.
As reported by CriptoNoticias at the time, he said that “regulators must realize that if we put the financial sovereignty that bitcoin grants in the hands of people oppressed by authoritarian regimes, such as those in Venezuela and Cuba, then they will be able to stand up to this oppression.”
On that occasion, the Cuban businessman Boaz Sobrado stated that it would be a miracle for the adoption of bitcoin to gain momentum, “because there is no official legal way to access the networks.”
Nevertheless, the adoption of bitcoin and other cryptocurrencies is being driven largely by mobile internet access that began to be provided to Cubans just three years ago.
Bitcoin regulation in Cuba is good, but what do we do with KYC?
“People in Cuba are embracing cryptocurrencies because they offer the ability to transfer money directly between two parties, without going through a bank,” said Emily Morris, an economist at the University of London.
Already in July 2019, Cuba was studying the use of cryptocurrencies as part of a series of measures to boost its economy, in the midst of an economic crisis and the increase in sanctions by the United States.
In fact, Cuba is one of the countries that can obtain the greatest benefit when sending remittances with bitcoin because it has the highest average in the region for sending money to other countries, according to calculations by economist Steve Hanke.
Cuba, Paraguay, Brazil, and Costa Rica 2020 spent between 6.60% and 10.53% on fees when sending and receiving remittances, an amount that can be significantly reduced when transferring money with BTC.
However, beyond local regulation and how bitcoin can make life easier for Cubans, there are also other facts that should concern them, such as the procedure «Know your client» (KYC), which is required by the Financial Action Task Force (FATF).
This regulation requires that cryptocurrency exchanges and other service providers, comply with the obligation to request private data from their users.
Among these data, name, surname, account number, physical address, identity card number, place and date of birth are requested. In addition, whoever receives the funds must be identified with her name and account number.
If you live in Cuba and are now using bitcoin trying to make a transaction that circumvents US sanctions, then you are running into FATF anti-money laundering legislation. So trying to win on one side, you can dive on the other, which seems like kind of a critical issue to me.
Emily Morris, an economist at the University of London.
In this regard, Matt Odell has warned people who have bitcoin, about the importance of understanding the mechanisms with which they can preserve their privacy and if they end up filling out a KYC form at the end of the day. “Be aware that you need to improve your overall privacy footprint,” he said.