As new U.S. government measures imposing restrictions on remittances to Cuba became effective after November 22, Western Union, which had operated in the island nation since 1999, closed its service. The new rule, published on October 27, gave Western Union 30 days to implement restrictions. With the formal channel gone, Cubans are now urgently seeking alternatives, and cryptocurrency adoption is expected to accelerate.
Targeted Sanctions Cut Off Key Partner
The U.S. government stated that remittances to Cuba can still flow, but "not through the hands of the Cuban military, which uses those funds to oppress the Cuban people and to fund Cuba’s interference in Venezuela." According to U.S. officials, Western Union’s partner in Cuba, Fincimex, is controlled by the Cuban military. Western Union later said it was unable to find a solution in the limited timeframe, leading to its exit.
Remittances are among Cuba’s top sources of foreign currency. Estimates placed total remittances in 2017 at $3.5 billion. The end of Western Union’s service presents a challenge for Cuban families relying on funds from the U.S. They must now choose between unsafe informal channels or digital alternatives like Bitcoin.
Growing Use of Cryptocurrency Remittances
Reports indicate a growing use of cryptocurrencies by Cuban residents. They are used to pay utilities and for cross-border payments. Covid-19 restrictions on movement have further spurred this trend. For instance, peer-to-peer platform Bitremesas enables remittances via Bitcoin; recipients have their local bank card credited with Cuban Convertible Pesos (CUC) or Cuban Pesos (CUP). The platform reported increasing business during lockdown, as it operates independently of banks and uses decentralized cryptocurrencies that neither U.S. nor Cuban authorities can censor.
Another organization, Cubacripto, uses a similar process: a trusted third party receives bitcoins and credits the beneficiary’s bank account with local currency. All trades are initiated via social media channels like Telegram and WhatsApp.
Peer-to-Peer Transactions to Grow, Challenges Remain
Due to U.S. sanctions, regulated P2P exchanges are unlikely to enter the Cuban void. Platforms like Paxful and Localbitcoins have already been forced to abandon the market. However, Cuban residents can still access local.bitcoin.com, a noncustodial marketplace supporting BCH trades with cash and over 30 payment methods.
As a result, Cubans abroad and recipients will likely need to create crypto wallets. These wallets not only enable direct fund receipt but also help bypass Cuban government schemes forcing families to buy state-produced goods. Moreover, cryptocurrencies protect funds from inflation, currency depreciation, and expropriation.
Whether the new restrictions will truly boost crypto use in Cuba remains to be seen, but early signs point to a significant shift.