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On Thursday, the Cuba government said it will recognise and regulate cryptocurrencies for payments in the nation.

According to reports, a resolution was published in the country’s Official Gazette, which stated that the Central Bank will set rules for cryptocurrencies and determine how to licence providers of related services within the nation.

A Reuters report added that the “popularity of such currencies has grown among a technologically-savvy group in Cuba as it has become hard to use dollars, in part because of toughened embargo rules imposed under former President Donald Trump.”

The news follows Central American nation El Salvador’s June 2021 announcement to approve Bitcoin (BTC) as an official currency – becoming the first nation in the world to do so.

More recently, El Salvador’s President Nayib Bukele announced the country is planning to install 200 Bitcoin ATMs as part of the effort to recognise BTC as an official currency.

Like El Salvador, Cuba’s announcement is likely to come under criticism based on the notion that cryptocurrencies are highly volatile and their prices can fluctuate wildly – as they are independent of any central bank and prone to speculation.

Instead, transactions in cryptocurrency are recorded on decentralised, distributed blockchains.

As cryptocurrencies can be used for long-distance, anonymous transactions, they are sometimes considered to be popular with people attempting to evade government regulations – presumably including US restrictions on sending money to places such as Cuba, noted the Reuters report.

The Cuba resolution noted that the nation’s Central Bank can authorise use of cryptocurrencies “for reasons of socioeconomic interest”, but with the state assuring that their operations are controlled. It also explicitly noted that operations could not involve illegal activities.

With cryptocurrencies becoming popular in emerging nations, a recent report by blockchain data platform Chainalysis ranked India second in terms of global crypto adoption in 2021, amidst global crypto adoption rising over 880 percent in the last year.

In the report titled ‘The 2021 Global Crypto Adoption Index’, Chainalysis ranked India just behind Vietnam, which took first place out of 154 countries surveyed.