Cuba and Cryptocurrency
The status of cryptocurrency in Cuba remains ambiguous.
On one hand, the use of cryptocurrency is increasing across the island. The exchange of cryptocurrency in Cuba relies on recently founded platforms like Qbita and BitRemesas.[1] Currently, there is minimal data on the exact quantity of cryptocurrency in Cuba. However, reports suggest that the cryptocurrency community is small but growing in Cuba.[2] For example, the volume of trade using Qbita in October 2020 equaled the aggregate volume of July, August, and September 2020.[3]
Experts explain this trend in two ways. First, according to AP experts, the amount of cryptocurrency used and traded in Cuba has increased because of former-president Trump’s increased prosecution of banks trading to Cuba and the suspension of work authorizations.[4] Second, the ongoing consequences of COVID-19 created an atmosphere dependent on the use of digital platforms to generate income.[5] Related to this, Cubans abroad have used cryptocurrency to continue to send remittances to family members residing in Cuba.[6]
On the other hand, the Cuban Government has yet to regulate the emerging technology. In an interview with Cointelegraph, Qbita Founder Mario Mazzola said, “In Cuba, cryptocurrency is totally deregulated. It is neither legal nor illegal.”[7] Going further, BitRemesas Creator Erich García said, “In this moment, cryptocurrency in Cuba is not regulated. The Government simply does not consider this money like real money right now.”[8]
Despite regulatory inaction, cryptocurrency remains on the radar of the Cuban government. On various occasions, government representatives have spoken about cryptocurrency favorably.[9] Most notably, in a roundtable discussing economic proposals, President Miguel Díaz-Canel indicated that the Cuban government is discussing the use of cryptocurrency for national and international commercial transactions with academics.[10]
This view is primarily informed by the desirability of cryptocurrency amidst ongoing sanctions by the United States. The U.S. trade embargo prevents Cubans from using conventional international payment systems and financial markets.[11] This includes obtaining credit or debit cards for international use.[12] To skirt this, Cubans have increasingly relied on the use of cryptocurrency, a primarily unregulated, decentralized, and anonymous form of currency that can be traded via secure apps like WhatsApp and Telegram.[13]
According to Reuters, Adrian C. Leon described cryptocurrency as “a necessity [that] can be a solution to [Cuban] exclusion from the global financial community.”[14] For many, cryptocurrency is both a powerful tool[15] against the U.S. embargo and a means to generate a “profit on the international stock exchange, mocking the blockade.”[16]
Although there are favorable views about cryptocurrency, the Cuban Government has at the same time issued warning regarding their use.[17] For example, the Central Bank of Cuba issued a warning about fraudulent schemes disguised as seemingly legitimate cryptocurrency investments online.[18] For this reason, existing cryptocurrency operations are neither promoted nor endorsed by the Cuban state.[19]
Moving forward, the regulatory framework for cryptocurrency within Cuba is unclear. Although President Díaz-Canel indicated that Cuba would study the implications of implementing cryptocurrency, the announcement did not indicate whether digital assets would be adopted or whether a bank addressing digital currency would be established.[20] As the use of cryptocurrency increases on the island, it will be important to pay attention to announcements by President Díaz-Canel and the Central Bank of Cuba regarding further action.
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Cuba?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation, or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[2] Andrea Rodriguez, Criptomonedas ganan presencia como remesas en Cuba, Chicago Tribune (in spanish).
[3] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[4] Andrea Rodriguez, Criptomonedas ganan presencia como remesas en Cuba, Chicago Tribune (in spanish).
[5] Andrea Rodriguez, Criptomonedas ganan presencia como remesas en Cuba, Chicago Tribune (in spanish).
[6] Andrea Rodriguez, Criptomonedas ganan presencia como remesas en Cuba, Chicago Tribune (in spanish).; http://www.vanguardia.cu/de-cuba/19709-criptomonedas-en-cuba-estafa-u-oportunidad
[7] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[8] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[9] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[10] Sarah Marsh & Marc Frank, Cuba Studying Cryptocurrency as part of economic crisis measures, Reuters.
[11] Sarah Marsh, Skirting U.S. sanctions, Cubans flock to cryptocurrency to shop online, send funds, Reuters.
[12] Sarah Marsh, Skirting U.S. sanctions, Cubans flock to cryptocurrency to shop online, send funds, Reuters.
[13] Sarah Marsh, Skirting U.S. sanctions, Cubans flock to cryptocurrency to shop online, send funds, Reuters.
[14] Sarah Marsh, Skirting U.S. sanctions, Cubans flock to cryptocurrency to shop online, send funds, Reuters.
[15] Helen Partz, Interest in Cryptocurrencies Rises in Cuba Amid Regulatory Uncertainty, CoinTelegraph.
[16] http://www.vanguardia.cu/de-cuba/19709-criptomonedas-en-cuba-estafa-u-oportunidad
[17] Nota Informativa del Banco Central de Cuba, Banco Central de Cuba.
[18] Nota Informativa del Banco Central de Cuba, Banco Central de Cuba.
[19] Government of Cuba evaluates the introduction of cryptocurrency, despite cases of “scam,” DW.
[20] Felipe Erazo, Cuban Central Bank Issues Warning on the Rising Number of Crypto-Related Ponzi Cases, Bitcoin.com.
