Monetary reforms and a lack of regulation mean crypto is booming in Cuba.
Cuba is seeing an influx of cryptocurrency activity amid an apparent absence of related regulation in the country, according to senior executives at local crypto firms.
In early November, Cuba recorded a major spike in Bitcoin (BTC)-related Google queries, indicating an increase in crypto activity in the country. Founders of major local crypto exchanges Qbita and Bitremesas told Cointelegraph that their platforms have seen increased activity in recent months.
Erich Garcia, the creator of Bitremesas, told Cointelegraph that the platform has been steadily growing this year, seeing a notable influx in user activity. “By now, the use of the service is increasing at 200% every month,” Garcia said.
“Bitcoin usage and volume in Cuba is exploding right now,” said Mario Mazzola, founder of Qbita exchange. According to the executive, Qbita’s trading volumes in October were equal to the total volumes of September, August and July combined.
However, the regulatory status of crypto-related activity is not yet defined in Cuba, both executives noted. Amid this regulatory uncertainty, a number of entrepreneurs are moving into crypto, Garcia claimed:
“[Right] now, the cryptocurrency in Cuba is not regulated, the government just doesn’t consider these coins as real money so far. Then, many entrepreneurs are migrating their commerce to this global and more powerful currency.”
Qbita’s Mazzola said that cryptocurrency in Cuba is “totally deregulated,” while at the same time, the local government has endorsed crypto as a means to circumvent sanctions. He said:
“In Cuba, cryptos are totally deregulated. They are neither legal or illegal. […] In fact, on several occasions, representatives of the Cuban government hinted on TV that authorities look at crypto favorably, as they understand that crypto may be a powerful weapon against the U.S. embargo.”
As there is still no concrete legal status for crypto in Cuba, the operation of local crypto exchanges could raise regulatory questions, but Qbita’s founder is confident that local crypto businesses are not in danger because there is also no law explicitly prohibiting them from operating.
“Such P2P transactions are perfectly legal because in Cuba there is no law that forbids people to buy, hold, use and sell Bitcoin to another person,” Mazzola said.
According to Mazzola, local monetary reforms could be one of the major reasons behind rising crypto interest in Cuba. The Cuban government plans to eliminate its dual currency-based economic model, removing the Cuban convertible peso (CUC) and keeping the Cuban peso (CUP). Mazzola said:
“The rise of BTC in Cuba is due to the fact that the government announced recent major monetary reforms, which involve currency unification (CUC goes away, CUP stays) and devaluation of CUP vs. the U.S. dollar. As a result people are using Bitcoin to avoid inflation and the negative impact of devaluation on their savings.”
As previously reported, growing crypto interest in Cuba is also partially a response to the lack of digital financial services in the country. Major companies like PayPal and Stripe do not provide services for Cuban nationals due to sanctions by the U.S. Office of Foreign Assets Control, or OFAC.
The limits on Cuba’s access to financial services extend not only to traditional payment firms, but also global crypto companies like Paxful and LocalBitcoins. Jukka Blomberg, chief marketing officer at Finland-based LocalBitcoins, said:
“Cuba is on OFAC sanction list and we have contractual obligations with some of our partners, which means that we cannot operate in Cuba. Not sure if this will change anytime in future, however, unfortunately currently this is the situation.”