The Communist government of Cuba has signaled it may undertake a domestic pivot toward cryptocurrencies in order to leverage the cryptoeconomy to better the lives of everyday Cubans.
The potential shift toward digital assets comes in part because of the biting impact of long-standing U.S. sanctions on Cuba.
That revelation comes via Cuban President Miguel Diaz-Canel, who declared in a domestic television broadcast this week that the country’s government may use crypto as part of a campaign to increase the incomes of up to 25 percent of Cuban citizens.
The leaders of the island nation, like the leaders of other countries who have recently found themselves at the brunt end of U.S. sanctions, perceives in cryptocurrencies a way to sidestep the worst effects of its global economic blacklisting.
The aforementioned campaign will reportedly lift salaries for workers in some Cuban industries as much as 78 percent. However, specific details on the initiative are scarce for now, and there’s no precise outline at present for how digital assets will figure into the Cuban government’s economic plans going forward.
Even still, the Cuban government didn’t have to publicly mention cryptocurrencies at all. That reality suggests the interest is there, whatever ends up happening next.
Crypto: the Workaround for U.S. Sanctions?
Cuba’s gripes with U.S. sanctions aren’t unique on the global stage. Take Venezuela and Russia for example.
Last fall, the Communist administration in Venezuela — headed up by then Venezuelan President Nicolás Maduro — set up an exchange rate between its supposedly “oil-backed” cryptocurrency, the petro, and Venezuela’s hyperinflated bolívar fiat currency.
At the time, President Maduro characterized the preliminary setting of the exchange rate as part of his country’s battle against the U.S. dollar and against America’s sanctioning of the petro. As he commented in August 2018:
“They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices. We are going to convert the petro into the reference that pegs the entire economy’s movements.”
Beyond Venezuela, officials in Russia have also eyed cryptocurrency as a potential way to sidestep U.S. sanctions.
Indeed, the leadership at Russia’s central bank, the Bank of Russia, are reportedly currently in the midst of researching the potential issuance of a central bank digital currency (CBDC).
That research comes after the central bank started reviewing a proposal for a gold-backed cryptocurrency that was recently put forth by the State Duma, i.e. Russia’s lower parliamentary house.
The murmurs around a Russian CBDC and gold-backed crypto come as the Eurasian Economic Union bloc — which includes Russia, Kyrgyzstan, Kazakhstan, Belarus, and Armenia — is in the middle of developing a member-centric crypto that will be used, in part, to sidestep U.S. economic sanctions against Russia.
The bloc’s crypto is planned to be released next year or no later than 2021. Simply put, it would be the Russian Federation’s latest step to pivot away from the U.S. dollar, though it’s not the only related proposal in the ether.
Indeed, former Russian energy minister Igor Yusufov has gone on the record in recent months as saying that an oil-backed cryptocurrency might be the ideal way for his nation to avoid economic sanctions. (Notably, the U.S. steppped up sanctions on Russia in the wake of Russia’s military intervention in Ukraine in 2014 and beyond).
To that end, Yusuov said:
“[An] oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years, and to step up exports of oil and natural gas.”
Zooming further out, a State Duma proposal materialized last fall that called for the creation of a stablecoin that would be pegged to the Russian ruble. However, the country’s central bank hasn’t formally moved forward on the proposal to date.