Cuba’s central bank issued new directives for virtual asset service providers operating in the country to increase regulation of the crypto industry, Reuters reported.

Cuba passed the use of cryptocurrencies for its citizens in 2021.

In the bank’s official bulletin published on April 26, the bank stated that any crypto project looking to operate in the country would have to apply for a license with the regulator.

This license will be valid for only one year initially.

This move has led some to believe that Cuba’s adoption of cryptocurrencies could be a way around US sanctions. The United States has heavily sanctioned the island nation for decades, making it difficult for its financial system to thrive.

Cubans have little or no access to traditional financial markets and the payment system. And due to the US trade embargo, they don’t have access to debit or credit cards for international payments.

Internet access drives cryptocurrency adoption

Cryptocurrency adoption in Cuba has grown significantly since the introduction of mobile internet a few years ago. The access provided people with a new opportunity to engage in cross-border transactions from within the country.

Speaking about the new rules, a former Cuban central bank economist who now serves as a professor at the Pontificia Universidad Javeriana Cali in Colombia, Pavel Vidal, said:

If the central bank is creating a favorable legal framework for cryptocurrencies, it is because they have already decided that it can bring benefits to the country.

Although he does not see Cuba adopting cryptocurrencies as its national currency, he believes that it can still offer the country a good alternative.

This can reduce the cost of these international transactions and generate an alternative to operations in dollars, less sensitive to the sanctions scheme.

Crypto adoption remains high

With the growing popularity of cryptocurrencies, more countries around the world are looking at how to regulate cryptocurrencies and virtual assets.

the savior did Bitcoin your national currency in September 2021.

Meanwhile, the Central African Republic adopted Bitcoin as legal tender in a move designed to help improve its fragile economy in the week of April 25.