Now that Cuba is moving toward becoming a crypto-friendly jurisdiction, the Caribbean island nation has brought hope to a population that has been on the losing side of the equation for too long. The Central Bank of Cuba is gearing up to recognize and regulate cryptocurrencies such as bitcoin in the face of a currency crisis that has added insult to injury in the ailing economy. Bitcoin adoption is nothing new there, but Cubans still might want to enter this new era with their eyes wide open.
The world is watching as Cuba takes a page out of the book of Caribbean nation El Salvador, which is on its way to legalizing bitcoin as legal tender. Cubans, meanwhile, have been put through the wringer economically, not least because of the government’s recent decision to eradicate the convertible peso, which was tied to the U.S. dollar, which incidentally is widely accepted in Cuba.
Alex Gladstein, chief strategy officer at the Human Rights Foundation, was recently featured on The Pomp Podcast, where he explained how Cubans have had the rug pulled out from under them time and time again since the early 1990s, when dollarization was happening, which led to the rise of the now-canceled “fake dollar,” or convertible peso.
Meanwhile, with U.S. sanctions against Cuba, remittance payments have been cut off, and the peer-to-peer nature of bitcoin has become increasingly attractive. Cubans have also started participating in some of the hottest crazes unfolding in the blockchain space, including non-fungible tokens (NFTs), where creators can sell digital artwork for a profit.
Gladstein also spoke with Kitco, addressing the likelihood of a formal regulatory framework for bitcoin in Cuba, leading to wide-scale adoption on the island.
“I think regulation in Cuba will lead to much wider adoption. The government will try to control the exchange markets, but it will not be able to do so effectively. People will gain more financial freedom,” he said in the interview. “However, if the regime starts to accept BTC for MLC top-ups, that could be an effective way for it to continue stockpiling hard currency.”
Cuba’s Freely Convertible Currency, or MLC, system is akin to a gift card that must be topped off. The MLC is accepted by most retail stores that carry essentials on the island. Gladstein, in the podcast, described the MLC system as another rug pull, saying it forces people abroad to top off the accounts in other currencies since it’s the only way to pay for basic items, including groceries.
As a result, Cubans have become fed up. They have already started moving toward bitcoin, including everyone from pro-democracy proponents to communists. All of them are looking for an alternative payment method. Gladstein said in the podcast it is “remarkable to see,” adding that it is a “microcosm of what we’re seeing around the world today,” as “people are opting into something that is hard money that will be there for them in the future.”
Boaz Sobrado, a U.K.-based data analyst, told Kitco that while Cuba’s move toward cryptocurrency regulation is a game-changer, the way it will look when it’s all set and done is another thing altogether.
“I think it means a lot in the sense that the government is engaging with it, but it remains to be seen what the actual regulation will bring. Will we see bitcoin sold through the government exchanges (CADECA), or will we see a Venezuela-style petro money grab? It’s too early to tell, but this shows they are looking at it seriously and that it’s become a serious societal issue. I suspect a significant percentage of the informal remittance trade is settling on crypto rails.”
Meanwhile, foreign countries continue to look to Cuba with their eyes set on a different kind of mining involving precious metals, gold and silver.
Since Cuba’s bitcoin plans came to light last Thursday, the bitcoin price is up 3.3% though it still hovers below the psychologically important USD 50K level.