Cuba embraces bitcoin to escape US embargo

In the first four months of the year, foreign tourists arrived Cuba There were 450,000, seven times more than in the same period last year, but less than half of the 968,000 in the first quarter of 2020. For the island’s economy, it represents hope for a return to the top after the hit it has been accused of. pandemic. But the crisis of recent years is weighing heavilyUS ban And the exchange rate reform introduced at the beginning of 2021. Without a tourist, a few dollars enter Cuba to import products from abroad. And because of this tooeconomic inflation It has gone up recently, while shelves have emptied in many cases.

Cruel US embargo, Cubans flee misery

Another positive sign for Cuba emerged this week with the resumption of US consular activities after more than four years. In 2017, US embassy and consulate officials contracted an unknown disease on the island, renamed it Cuba Syndrome After that, diplomatic staff were repatriated. The first visas issued would help Cubans to legally immigrate to the United States. In March alone, 32,500 people attempted to enter US soil illegally. Another 78,000 Cubans attempted to enter the United States through Mexico between October and March.

If this happens, it is because the conditions of the Cuban economy are miserable. The US ban has been tightened in the final days of the Trump administration. US banks are prohibited from having relationships of any kind on the island. This makes it very difficult for Cubans living in the United States to send money to the families they left behind. And here at the end of April, the Central Bank of Cuba embarked on activities digital assetsOpening the door for licenses in favor of service providers.

However, the allowed assets cannot be representative of fiat currencies (dollars, euros, etc.) and securities, as if they are located in another regulated domain.

Already some shops in Cuba accept payment in Bitcoin And EthereumThe most famous cryptocurrency. President Miguel Diaz-Canel has long been a supporter of these assets, seeing them as a way to circumvent the US embargo. In fact, funds are transferred through digital currencies instantly, without costs and without the necessary presence of an intermediary. It is no coincidence that last September El Salvador even recognized Bitcoin Legal currency. The Central American country therefore wants to reduce money transfer costs on migrant remittances, which amount to a quarter of GDP and are often charged commissions of more than 10%.

Cryptocurrencies are also against inflation

It is unlikely that Cuba will go that far, but official recognition of “cryptocurrencies” will be a weapon that Havana will use to bypass the US embargo. Last year, the CUP, or Cuban peso, was withdrawn from circulation. Only CUC or convertible peso is left at the exchange rate of 24 for 1 US dollar. In fact, there was one Maximum coin value 96%. And on the black market you can buy a dollar for up to 100 CUC. This measure, necessary to reform the socialist economy, caused consumer prices to explode. Officially, it peaked at 77.3% in December, but independent economists estimate it reached 500% in 2021.

Thanks to Bitcoin, the Castro regime hopes that citizens will have greater access to the dollar and that this will ease tensions on the exchange while at the same time stabilizing local prices. There will be 100,000 Cubans already using “cryptocurrencies” on the island, about 1% of the population, twice the global average. And the data will be even more incredible if you consider that up to three years ago it was not even possible to reach World wide web for mobile phones.

It was precisely this opening that accelerated the incubation time of the cryptocurrency market. It will not be enough to completely weaken the American blockade, but it will help a little.

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