Bank of Cuba Releases New Framework Regulating Cryptocurrency and Virtual Asset Service Providers

The Bank of Cuba, responsible for regulating the banking and monetary policy of the country, has issued a new framework that regulates the interactions between individuals and virtual asset service providers in the country. The new law introduces the concepts of cryptocurrency and service providers, and establishes harsh controls on the use of these by citizens and institutions.

Bank of Cuba Regulates Cryptocurrency

The Bank of Cuba, responsible for regulating several aspects of the monetary policy of the country, issued a new set of cryptocurrency-related rules to control the usage of crypto by private individuals and establish licenses for the operation of virtual asset service providers. The bank will be the only entity able to issue cryptocurrency usage permits and licenses to cryptocurrency exchanges.

According to the fourth article of the law, all cryptocurrency operations will have to be approved and licensed by the Bank of Cuba. Not even state actors will be able to use crypto for payments and transactions without being approved by the institution. Also, traditional finance structures like banks will have to design measures to prevent their platforms from being used for cryptocurrency-related transactions.

Framework Hints at Penalties

While the framework doesn’t explicitly mention the penalties that unauthorized users would have to face, its eighth article states:

Natural persons assume the risks and responsibilities that in the civil and criminal order derive from operating with virtual assets and service providers of virtual assets that operate outside the Banking and Financial System, even when transactions with virtual assets between such persons are not prohibited.

The motivation behind Cuba’s new regulatory framework seems to be derived from the disconnect between virtual assets and the traditional finance system. This, according to the resolution, makes cryptocurrencies especially useful to “finance criminal activities, given the excessive anonymity of registered users in said networks and of the transactions that are derived from its use.”

This situation could engender a negative environment around cryptocurrencies in the country that, according to reports, has a substantial userbase that leverages crypto to receive remittances from other countries due to the nationwide dollar embargo. However, well-known Cuban cryptocurrency proponent Erich Garcia Cruz thinks differently. He stated on Twitter he will just abide by the laws of the country. He stressed:

Yes, I am Cuban, yes, I use cryptocurrencies a lot, yes, I am a natural person. I am going to request the necessary licenses to operate with that digital asset. I live in Cuba and I must comply with the laws of Cuba.