Cuba joins the Crypto Movement in the Caribbean
The Caribbean has been a popular place for crypto lately ever since El Salvador started adopting Bitcoin as a legal tender, with Eastern Caribbean becoming the first union to release a blockchain-based digital currency. The latest to join the movement is Cuba which despite its resistance toward crypto in 2021 has chosen to embrace the crypto space. Cuba has suffered due to the pandemic and US embargoes but is crypto the solution needed for Cuba?
Cuba Economy and Crypto Development
Cuba is the largest nation in terms of economy and landmass in the Caribbean and over the years has taken a different path than the other nations in the region. Cuba is not only well known for its cigars and sandwiches but it’s also one of the countries that still adopts the socialist or communist political regime. It has adopted the communist ideology ever since the Cuban Revolution where the nation has steered away from its ties with the USA and restructured Cuban society in favor of the popular classes. This ideology offered an alternative to capitalism used in most countries and it was achieved through sustained trade, credit, and aid from allies like Russia till 1989.
This Cuban Socialism has established advancements in healthcare and education but it has also never quite realized stable economic growth or increase in living standards. Cuba is considered one of the poorest countries in North America with a poverty rate of 26% and a GDP per capita of $7.98. Most of the businesses are state-owned while their agriculture and farming is also monitored by the state.
Cuba was also heavily hit by the pandemic in which it has so far seen its economy shrank by more than 13% over a two-year period and the nation facing a food shortage as it is highly dependent on other countries for imports. Miguel Diaz — Canel was then elected as the first party secretary to the most powerful position in the country to replace Raul Castro and was tasked with the huge task of restoring the country’s economy.
One of its favored moves was lifting the ban on private companies that have been in place since 1968, which is a move to encourage more private innovation to restore the economy. The government has increased wages for both the public and private sectors while also setting up shops where citizens can pay with foreign currencies in an attempt to stabilize the economy.
Of course one of the problems that still looms large over the welfare of the Cuban Economy is the embargoes or sanctions placed by the USA on Cuba. This Embargo prevents American businesses, and businesses organized under U.S. law or majority-owned by American citizens, from conducting trade with Cuban interests. This Embargo was further expanded to include US Companies and Foreign Subsidiaries and travel restrictions to Cuba. This move has been costly for the economy with the Cuban government estimating that the embargo has cost the island itself $753.69 billion in lost business since its inception 55 years ago.
These conditions obviously were made worse when the Trump Administration banned the sending of remittances through Western Union and this gives momentum to the use of cryptocurrency within the country. Cryptocurrency has been gaining momentum lately with currently 1 to 2% of the Island Population owning a crypto wallet and this rise is also obviously paired with the rise of mobile internet in the nation three years ago.
Due to the embargoes, fintech companies are not allowed to enter the nation and so there is no crypto exchanges worldwide that would accept the Cuba Pesos. The trade or crypto transfer started to pick up when Alex Sobrino set up his own telegram cryptocurrency group called Cubancripto and the momentum happened from there. The trades happen using international exchanges while it is not feasible to do that through WhatsApp or telegram groups, this move is seen as the only option to gain access to international transfers.
Since then more companies start popping up including Bitremesas.com which helps process remittances sent into the country and has now processed transactions to more than 150.000 wallets so far. Crypto has also gotten onto the radar of the Cuban government. In August 2021, the Central Bank of Cuba authorized the use of certain virtual assets for commercial transactions and the granting of licenses to virtual asset service providers, for the purpose of carrying out certain financial activities, such as the collection of payments while still obeying the local laws.
Is it the right time to regulate crypto?
Crypto obviously knows no boundaries so it is clearly not affected by geographical locations or sanctions and this aspect might be one of the factors that can help Cuba recover its economy. We live in an era of a globalized economy and access to international transfer or business is key in stabilizing an economy. Cryptocurrency is giving Cubans a chance to take part in the world economy without the limitation of sanctions or embargoes.
While it is quite uncommon for a nation run with socialist ideology to embrace a decentralized peer-to-peer to network, it is quite a solution that may benefit in the long run. As we can see from neighboring nations like El Salvador, embracing crypto does not only bring monetary benefits but also could boost the tourism sector for Cuba as more digital nomads are looking for crypto-friendly nations.
It does also help to boost remittance and investments that come within the country which would before be denied before the embargoes. So yeah it is the right time for Cuba to regulate crypto as it provides solutions for Cuba to recover its economy that badly had been reprived of International access to finance. These regulations obviously could mean huge for the adoption and growth of the crypto space in Cuba.
“Regulators around the world, from communist Cuba’s central bank to the SEC, are trying to come to grips with the cryptocurrency industry. This implies that crypto is a global phenomenon and regulators have decided that it’s here to stay and worth engaging with. Strangely enough, it’s bringing some sort of legitimacy to the space. It’s gotten too big to ignore,” said Boaz Sobrado, fintech entrepreneur and founder of Cuba-based tourism website WhyNotCuba.com
We in Nagaya Technologies Pte. Ltd surely believe that proper regulation is necessary to secure and make the cryptocurrency space accessible. We hope that this will further enable us to share the revolutionary concept of Nagaya with everybody. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial
