The Cuban central bank released regulations for virtual asset service providers on Tuesday, a move that some experts believe could help the Communist-run Caribbean island avoid hefty US sanctions.

Cuban Central Bank Announces Crypto License

The Central Bank of Cuba (BCC) has declared that virtual asset service companies would be granted licenses.

The license will be available to both Cuban and foreign individuals and organizations. It will be valid for one year, with the possibility of a second year extension.

The providers will be able to work with virtual assets that have been approved by the BCC, according to the resolution. Virtual assets do not include digital representations of fiat currency, securities, and other financial assets often utilized in traditional banking and financial systems, which are regulated by separate Central Bank laws.

Related Reading | How Bitcoin Became More Valuable Than The US Dollar In Cuba

Before giving a license, the bank said it would assess the legality, socioeconomic interest, and project features of any request. The license would be valid for one year at first.

All crypto-related operations would be permitted as long as they did not incorporate digital representations of fiat currency, securities, or other financial instruments widely employed in traditional economic models. Service providers who have been licensed cannot stop operating without the permission of the central bank. Any violations of the license will be prosecuted under Decree 363, which deals with administrative violations of banking, financial, and foreign exchange laws.

Crypto Has Been Cuba’s Way Of Bypassing Sanctions

The introduction of mobile internet three years ago paved the path for cryptocurrency transactions in Cuba, and the number of cryptocurrency fans on the island is growing as the currencies assist the nation overcome difficulties posed by US sanctions

Cubans are cut off from traditional international payment systems and financial markets by the US trade embargo, which has been in place for decades. Credit or debit cards are not available to Cubans.

“If the central bank is creating a cryptocurrency-friendly legal framework, it is because they have already decided that it can bring benefits to the country,” said Pavel Vidal, a former Cuban central bank economist.

BTC/USD trades above $40k. Source: TradingView

The island nation had already issued a CBDC the previous year (Central Bank Digital Currency). Cuban President Miguel Diaz-Canel has always been a supporter of cryptocurrencies, seeing them as a tool to end the US dollar’s oppression. Diaz-Canel was cited as saying,

“The country is studying the use of cryptocurrencies with the aim of belonging to a financial scheme that does not have the dollar as the central point of monetary transactions.” 

El Salvador, the first country in the world to embrace bitcoin as legal tender, is one of Cuba’s Latin American neighbors to be interested in cryptocurrencies.

Vidal said he doubted the country would follow El Salvador’s lead and adopt bitcoin as its currency of choice or create its own cryptocurrency, instead preferring to focus on enabling remittances and international foreign trade operations.

For the time being, the license will concentrate on creating a regulatory framework for cryptocurrency activity in the country.