Cryptocurrency transactions could be the savior as Cuba mulls over ways to evade US-imposed sanctions

  • 03 July 2019, Wednesday, 06:30

Is there any other currency that can be used to pay for pineapple pizzas and escape the economic sanctions imposed by the most powerful country in the world. Yes, there is.

According to Reuters, the communist government of Cuba announced on July 2 that it was mulling the “potential use” of cryptocurrencies, in order to evade sanctions imposed by the United States and boosting its economic status.

Cuba thus, is taking a page from the Venezuelan handbook, a country which is in deep economic turmoil following the political uncertainties of the Maduro government and its state-backed ‘cryptocurrency.’ However, despite several tall claims about the touted ‘Petro,’ the project has been met with several roadblocks.

Cuba is on the receiving end of a US trade embargo imposed by the Trump administration, in addition to the lack of aid from countries such as Venezuela.

In the midst of the sanctions regime targeting Cuba’s tourism and foreign investment industry, the government is looking to introduce crypto-based transactions. Cuba’s Minister of Economy, Alejandro Gil Fernandez, stated that work is being done both on the theoretical and pragmatic front. He added,

“We are studying the potential use of cryptocurrency … in our national and international commercial transactions, and we are working on that together with academics.”

The plan seeks to increase domestic production in a bid to boost economic growth, and the same could be built on the foundation of cryptocurrency transactions, if this “potential” use case does manifest.

Even if the actual pragmatism of digital assets is not employed, the government is looking into the principles of cryptocurrencies. Fernandez added that the government will aim to decentralize state-run companies in order to ‘stimulate’ local production. However, financial service companies born out of this decentralized effort will provide cash, rather than coins.

With an emphasis on spurring economic demand within the country and breaking up large corporations, with the possible foundation of bringing in cryptocurrencies as a base for the same, Cuba could become a hotbed for virtual currency retail trade.

Despite government officials preferring cash, an understanding of the digital asset’s anonymity, immutability, transparency and uncontrollable nature might change their mind.

The Cubans should be lighting their cigars, mulling over this prospect.