Making a payment is no longer a problem for many Cubans who now can use Bitcoin. Beyond local regulation and how Bitcoin can simplify the life of Cubans, the concern turns to KYC.
Cryptocurrency adoption is growing in Cuba, where at least 100,000 people now use Bitcoin (BTC) and other crypto assets. They are discovering the benefits crypto assets offer amid the sanctions imposed by the United States.
The inhabitants welcomed the news that the Central Bank of Cuba (BCC) is legalizing cryptocurrency service providers. Many applaud the law granting licenses to companies wishing to conduct activities related to crypto assets.
Economist Pavel Vidal stated the central bank is creating a crypto-friendly legal framework as they consider it can benefit the country. Pavel is a researcher at the University of Havana and a specialist at the Central Bank of Cuba.
Since October, businesses have accepted cryptocurrencies as payment for their goods and services. El Café Havana, a restaurant in the capital of Cuba, receives Bitcoin and Ether (ETH). Nelson Rodriguez, the owner, said that he likes Bitcoin because of its philosophy.
Bitcoin is gaining popularity in a country without access to other international payment systems like PayPal, Revolut, and Zelle. They cannot use other forms of credit or debit either due to sanctions hindering the development of commercial and economic relations.
Cuban bitcoiner Erich García commented that making a payment is a headache, but Bitcoin can solve that problem. Things seem to be changing for the better now that the regulation of cryptocurrencies is underway.
Bitcoin Represents the Financial Sovereignty of Cuba
Many might interpret what happens in Cuba as a script written by bitcoiner and developer Matt Odell. In June 2021, he said that people could face oppression if regulators put the financial sovereignty that Bitcoin grants in their hands.
At that time, Cuban businessman Boaz Sobrado stated that it would be a miracle for Bitcoin adoption to gain momentum. The problem was that there was no official legal way to access the networks.
However, the adoption of cryptocurrencies is gathering momentum mainly through the mobile Internet access provided to Cubans since 2019.
Bitcoin Regulation Is Good, but the Concern Is about KYC
Cubans are adopting cryptocurrencies as they allow transferring money directly between two parties with no need for a bank.
In 2019, the Caribbean country started to study the use of cryptocurrencies as part of measures to boost its economy. At the time, they were already amid an economic crisis and the increase in US sanctions.
One of the nations that can benefit the most from sending remittances with Bitcoin is precisely Cuba. Calculations by economist Steve Hanke indicate it has the highest average in the region for transferring money to other countries.
In 2021, Cuba spent between 6.60% and 10.53% on fees when sending and receiving remittances. They can reduce that amount significantly by transferring money with BTC.
Bitcoin could make the life of Cubans easier through the local regulation that is underway. However, the Know Your Customer (KYC) procedures required by the Financial Action Task Force (FATF) should concern them.
Matt Odell has warned people who own Bitcoin about the importance of understanding the mechanisms to preserve their privacy. If they end up filling out a KYC form, they should be aware that they need to improve their privacy footprint.
By Alexander Salazar
