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Can Libra change Cuba? Overview of the development of the cryptocurrency industry in Cuba

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Can Libra change Cuba? Overview of the development of the cryptocurrency industry in Cuba

The long-term distrust of the traditional financial system by the people of Cuba under communism has gradually allowed for the development of cryptocurrencies in the region. The recent buzz surrounding Facebook's Libra project has sparked discussions on whether it could become a breakthrough for widespread adoption of virtual currencies.

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In the politically independent island of Cuba, people are quietly starting to use cryptocurrency and closely monitoring the development of Libra.

Cryptocurrency Usage

Fusyona is a Cuban company founded by Claudia Rodriguez, the only Bitcoin exchange actively serving Cubans. According to a report, the exchange has nearly 700 accounts since 2018, with approximately 60 users buying one to two bitcoins per week. While the numbers may seem small, it is significant for Cuba.

Although the trading volume is not large, Claudia Rodriguez stated:

For Libra, the development in Cuba could be very interesting and promising. At the same time, the Libra stablecoin whitepaper also states that Facebook's main focus will be to connect digital financial services in underbanked regions globally.

There are also many examples of Cubans using Bitcoin to transact with each other, such as cryptocurrency entrepreneur based in Seattle, Elvis Morales, who regularly sends bitcoins back to his family on the island.

"The key is how do we treat these currencies as real money?" Elvis Morales said. "We have banks, but we usually don't use them because the government can legally come after you and ask why you have that money?"

Given this background, an anonymous Bitcoin user in Havana told CoinDesk that if Facebook's cryptocurrency project is widely accepted and used in Cuba, it could open up many channels for encrypted payments in Cuba. However, he also mentioned a concern, "Unless we enter the global monetary system, the Cuban people won't be able to use Libra."

Meanwhile, the Cuban Communist Party recently announced a national cryptocurrency project. However, due to the long-standing government control over the market in Cuba, many Cubans still do not trust government-backed financial institutions.

Libra Regulatory Situation

So far, there is no indication that the Libra Association can help provide mainstream cryptocurrency services in Cuba.

Although Cuba fits well with the development targets mentioned in the Libra whitepaper, a Facebook spokesperson stated that due to U.S. sanctions, there are currently no plans for Cubans to use the Calibra wallet.

Facebook is facing challenges domestically, with opposition from domestic regulatory bodies and calls in Congress this week to halt the development of Libra. However, according to a regulatory lawyer in the fintech industry, transferring funds within Cuba after scrutiny is not illegal, but doing so may increase the risks that Libra aims to avoid in terms of regulation.

Therefore, the Facebook spokesperson added:

This does not mean that other wallet providers cannot do this; other companies can freely create wallets for Libra, so theoretically, there could be wallets in Cuba that can be used locally.

Development of the Cryptocurrency Industry

Most Cubans only started using the internet in 2018. Even today, the cost of using the internet is very high for them, so few use messaging tools like WhatsApp. Most cryptocurrency trading platforms are inaccessible in Cuba, so they mainly transact through informal means.

Due to long-standing government control over capital and banks, people have a deep distrust of these systems. Even the only foreign currency, the U.S. dollar, was not legalized until 1993, making it hard to imagine the U.S. engaging in encrypted trade with Cuba.

A local said:

Cubans will accept anything you give them as long as they can exchange it for goods.

Although the usage is not widespread, and there is currently no sign that Cubans without bank accounts can easily use Libra, Bitcoin has undeniably provided Cubans with an avenue for censorship-resistant transactions, and they continue to watch Bitcoin closely.

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