As new U.S. government measures imposing restrictions on remittances to Cuba took effect after November 22, Western Union—which had operated on the island nation since 1999—closed its shop. The new rule, published on October 27, gave Western Union 30 days to implement new restrictions. Despite initial promises to find a solution, the global remittance giant announced on November 13 that it was unable to “find a solution in this limited timeframe.”
Targeted Sanctions Shut Down Western Union
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, hence the new measures. The end of formal remittance services by Western Union is likely to rattle the communist country’s financial position. Cuba relies heavily on remittances as one of its top sources of foreign currency; estimates placed total remittances in 2017 at $3.5 billion. For Cuban families who depend on money sent from the United States, the shutdown presents a stark choice: resort to unsafe informal channels or switch to digital alternatives like Bitcoin.
Growing Use of Cryptocurrency Remittances
Already, reports indicate a growing use of cryptocurrencies among Cuban residents. Digital assets are being used to pay for utilities and for cross-border payments. The restrictions on human movement imposed to curb the spread of Covid-19 appear to have accelerated this trend. Peer-to-peer platform Bitremesas, which enables remittances via Bitcoin, reported increasing business during lockdown. Recipients using Bitremesas have their local bank card credited with Cuban Convertible Pesos (CUC) or Cuban Pesos (CUP) upon transfer from abroad via Bitcoin. This system operates independently of banks and, because it uses decentralized cryptocurrencies like Bitcoin, neither the U.S. government nor Cuban authorities can censor transactions. Another organization, Cubacripto, uses a similar process where a “trusted” third party receives bitcoins and credits the beneficiary’s bank account with local currency. Trades are initiated via social media channels such as Telegram and WhatsApp.
Peer-to-Peer Transactions to Grow
With Western Union’s exit, many Cubans will find it logical to switch to cryptocurrencies. However, due to the overarching effect of U.S. restrictive measures, regulated peer-to-peer exchange platforms will refrain from entering the Cuban market. Platforms like Paxful and LocalBitcoins have already been forced to abandon the island. Cuban residents can access local.bitcoin.com, the non-custodial peer-to-peer marketplace that allows users to trade Bitcoin Cash (BCH) with cash and over 30 payment methods. Consequently, both Cubans abroad and homebound recipients will likely create crypto wallets, enabling them to receive funds directly and bypass certain Cuban government schemes that force families to buy expensive state-produced goods. Furthermore, cryptocurrencies help shield funds from inflation, currency depreciation, and even expropriation. As traditional channels shrink, digital assets offer a resilient and censorship-resistant alternative for Cuban remittances.