End of Western Union Remittance Service to Cuba a Boon for Crypto

As new U.S. government measures that impose restrictions on remittances to Cuba becomes effective after November 22, Western Union, which has been operating in the island nation since 1999, will close shop. The new rule, which was published on October 27, gave Western Union 30 days to implement new restrictions. The new rule is likely to increase the appeal of crypto assets as Cubans are now expected to find a suitable alternative in a very short space of time.

Targeted Sanctions

At the time of the initial U.S. government announcement, the global remittances giant had promised to find a solution for its Cuban customers. However, in a later update on November 13, Western Union said it was unable to “find a solution in this limited timeframe.”

For its part, the U.S. government says 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.

In the meantime, the end of the formal remittances service to Cuba by Western Union is likely to rattle the communist country’s financial position. Cuba counts remittances as one of its top sources of foreign currency and some estimates placed total remittances in 2017 at $3.5 billion.

For Cuban families that rely on remittances sent from the United States for survival, the end of Western Union’s remittance service presents a new challenge. Either the senders will resort to using the sometimes unsafe informal channels or they will simply switch to digital alternatives like bitcoin.

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