Cuba’s Top Bank Readies Licensing Framework For VASPs

According to a state document dubbed the Official Gazette 43, the Central Bank of Cuba has unveiled its plan to issue operational licenses to qualified virtual asset service providers (VASPs).

The statement released on Tuesday (April 26, 2022), said that the business licenses are valid for 12 months. Cuba’s top bank will also allow an option to extend this timeframe. An excerpt from the report reads:

Virtual asset service provider licenses are approved for a one-year period, extendable for a second year, given the experimental and novel nature of this type of activity.

Bank of Cuba Bootstraps Digital Economy With Licensing Policy

Banco Central de Cuba (BCC) hopes the new policy will bolster the country’s existing digital economy while encouraging new players to set up shop within the country.

Furthermore, it’s possible that the law could serve as a tool to mitigate years of sanctions imposed by the US government.

Since these sanctions restricted heavyweight payment giants like PayPal from servicing Cubans, citizens have increasingly turned to decentralized transaction portals and vehicles like Bitcoin and crypto, per data from a 2020 Google Trends report

However, the latest licensing framework is also supposedly geared towards establishing oversight for the burgeoning crypto industry and ensuring that companies comply with established financial policies and practices. 

BCC also said that several factors will determine if a company is issued a license or not.

he 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

In addition, VASPs are prohibited from shutting down operations without notice after receiving a license from Cuba’s apex bank. Crypto businesses must obtain permission from the BCC if they wish to withdraw their offering, per the announcement.

Finally, the Gazette document disclosed that the country will implement the BCC’s latest policy 20 days after the announcement. This puts the date for implementation at May 16, 2022.