Cuba to recognise and regulate use of cryptocurrencies

Central Bank of Cuba will establish a legal framework to ensure they are not used for illegal purposes

The Cuban government has said it will recognise and regulate the use of cryptocurrencies in commercial transactions.

The Central Bank of Cuba will set up rules and regulations to govern the use of the digital assets, said a resolution published in the Official Gazette of Cuba on Thursday.

It added the bank would also establish a legal framework to license cryptocurrency service providers to ensure the assets are not used for illegal purposes.

“The Central Bank of Cuba, for reasons of socio-economic interest, may authorise the use of certain virtual assets in commercial transactions and grant licence to virtual asset service providers for operations related to financial, exchange and collection, or payment activities,” the central bank said in the resolution.

“Financial institutions and other legal entities can only use virtual assets between them and with natural persons … to carry out monetary and commercial operations … as well as to satisfy pecuniary obligations,” it added.

In legal theory, a natural person is an individual human being, as opposed to a legal person that may be a private or public organisation.

Central banks around the world have been reluctant to endorse cryptocurrencies because of their speculative nature, lack of value and regulatory oversight.

Cryptocurrencies can enable criminal activity and “work against the public good”, the Bank for International Settlements, the global body for central banks, said in a report in June.

The biggest cryptocurrency, Bitcoin, flew to an all-time high of almost $65,000 in April, but crashed below $32,000 on May 23, losing more than half its value from the peak. It was $48,223.7 a coin on Friday.

Cryptocurrencies are showing signs of rising again after pulling back significantly from record highs in recent months due to concerns over a crackdown in China and questions fuelled by Tesla’s billionaire co-founder Elon Musk about energy usage during mining operations.

Due to the anonymity of cryptocurrency users, there is a possibility that they can be used to finance criminal activities, the Cuban central bank said.

It added that financial institutions and individuals must avoid dealing with service providers that are not authorised by the central bank.

The central bank added that the legal framework will aim to prevent the use of cryptocurrencies in illegal activities such as money laundering, terrorism and the proliferation of weapons of mass destruction.

Updated: September 8th 2021, 6:59 AM