Central Bank of Cuba to license VASPs come 16 May 2022

TL;DR Breakdown

• The Central Bank of Cuba (BCC) set to issue virtual asset service provider licenses.
• Cuba gazettes a detailed VASPs operational framework.

On Tuesday, the Banco Central de Cuba (BCC) announced its intention to grant virtual asset service provider licenses. The decision by the BCC may help Cuba’s fledgling tech sector develop. Soon, the Banco Central de Cuba will start issuing Bitcoin (BTC) and other VASPs licenses.

BCC: Banco Central de Cuba licenses digital asset service providers

According to Official Gazette No. 43, which was published Tuesday, anyone seeking to offer virtual-asset-related services must first obtain a license from the central bank. It says:

The Central Bank of Cuba, when considering the license request, evaluates the legality, opportunity and socioeconomic interest of the initiative, the characteristics of the project, the responsibility of the applicants, and their experience in the activity.

Gazette

According to the Spanish-language resolution published, the license will be available to natural persons. Both Cuban and foreign investors and organizations will be able to obtain a BCC license.

The licenses will be valid for a year. A second-year may also be obtained, according to BCC. The entity states because this sort of action is both experimental and unusual, licenses can be renewed in the country on a legal basis.

Furthermore, the document stresses that organizations not licensed under this legislation must do so. If not, they must face penalties in line with an existing bank and financial regulations on the island nation. The Gazette also states that this decision will come into effect 20 days after publication, which will be 16 May.

The central bank’s guideline adds that VASPs are not permitted to cease operations without prior permission from the BCC. The resolution stated that the companies would be allowed to operate with virtual assets authorized by the BCC without providing further information.

The Central Bank of Cuba has stated that virtual assets do not include digital representations of fiat currency, securities, or other financial assets. Cuban financial entities use these assets in conventional banking and financial systems, governed by laws passed by the Central Bank of Cuba.

In August 2021, the BCC passed a resolution that introduced rules for commodity derivatives and licensing service providers in the virtual assets industry.

The bank’s previous decision authorized it to grant licenses to virtual assets service providers for financial, exchange, and collection or payment transactions in and from the national territory, as stated by the BCC on Thursday.

The BCC ruled in September 2021 that cryptocurrencies such as Bitcoin are lawful payment methods. Although the institution was concerned about the risks of using cryptocurrency, it was made the only entity with authority to grant VASPs licenses.

Crypto adoption in Cuba

It’s tough to give Cuba an accurate cryptocurrency adoption rate, but the nation is undoubtedly experiencing development. In 2021, the country’s trade volume on popular exchanges increased dramatically. COVID-19 was also a significant cause for this increase, as individuals came to rely more on digital platforms to generate money. It’s also become a valuable tool for rural families to receive money from relatives or those working abroad.

Cubans can now use virtual assets to make their money accessible through remittance services that are more readily available, allowing them to send and receive funds across the globe without restrictions. The shift has the potential to spark new technological trends in Cuban technology development, which have been stifled for 60 years by US sanctions.

Global money transfer businesses have largely departed the country in response to rising international pressure from Washington. The BCC added that government agencies must refrain from using virtual assets in transactions except as authorized. However, the resolution did not address how the Cuban government would tax the virtual asset industry.

The BCC’s issuance process describes that the requested license will be authorized or denied within 90 working days from the date of receipt of all required documentation. Moreover, the entities in charge must consult the crypto assets group before a license may be granted.

Also, the bank has the right to shut providers down if they violate these norms. Furthermore, to prevent unauthorized operations, it will be required to keep accounting records in accordance with the Ministry of Finance and Price’s standards.

The BCC has further defined the penalties for licensees that fail to comply with the order as follows: Those who operate without a license will be held accountable under Decree 363. The Decree is concerned with administrative breaches of banking, financial, and foreign exchange regulations.