WASHINGTON — The U.S. Treasury Department on Tuesday announced regulatory changes to allow more American financial support for Cuba’s nascent private sector and bolster access to U.S. internet-based services. These limited but timely measures, officials said, would help give the island’s budding small businesses a leg up.

The United States announced it would permit small entrepreneurs on the Communist-run island to open and access U.S. bank accounts from Cuba for the first time in decades, following prohibitions put in place shortly after Fidel Castro’s 1959 revolution. This move is designed to facilitate financial transactions and provide Cuban entrepreneurs with the ability to manage their finances more effectively.

The measures will also allow Cuban entrepreneurs to use U.S.-based social media platforms, online payment sites, video conferencing, and authentication services. These services were previously unavailable to the sector and represented a major hurdle for small businesses on the island. By enabling access to these digital tools, the U.S. aims to support the growth and efficiency of Cuba’s private sector.

The Biden administration's initiative aims to fulfill its long-delayed pledge to support Cuba’s budding entrepreneurs, giving the small but fast-growing private sector deference despite the Cold War-era U.S. embargo that has for decades complicated financial transactions by the Cuban government.

“Today we’re taking an important step to support the expansion of free enterprise and the entrepreneurial business sector in Cuba,” a senior U.S. official told reporters on Tuesday. These changes are intended to provide significant support to small businesses, fostering economic growth and development within the private sector.

The Cuban government did not immediately respond to a request for comment on the policy changes. However, U.S. officials, who briefed reporters on condition of anonymity, indicated they had sought to balance the goal of bolstering the private sector with the desire to avoid benefiting Cuban authorities directly.

President Joe Biden took office in January 2021 with hopes high in Cuba for a reversal of the harsh Trump-era approach. However, Cuba’s crackdown on protests during the summer of that year prompted the administration to maintain pressure on Havana. The new measures explicitly exclude Cuban officials, military officers, and other government “insiders,” aiming to minimize resources available to the Cuban government from these benefits.

Republican U.S. Representative Maria Elvira Salazar, a Cuban American lawmaker from South Florida, quickly criticized the Democratic administration’s announcement. “The Biden Admin is now giving the ‘Cuban private sector’ access to the U.S. financial system,” she said in a post on X. “This would make a mockery of American law, considering no progress has been made toward freedom on the Island and repression has intensified.”

Cuba has long blamed the embargo—a tangled web of U.S. laws and regulations that complicates financial transactions by the Cuban government—for decades of economic crisis that have recently forced it to open its economy to small private businesses. These businesses, once taboo in Communist-run Cuba, are now booming on the island.

New Cuban laws enacted in 2021 have led to the establishment of over 11,000 small businesses as of May, according to government reports. These businesses range from corner grocers to plumbing, transportation, and construction firms, employing upwards of 15% of Cuban workers and accounting for around 14% of gross domestic product, according to economy ministry statistics from late 2023.

The regulations announced on Tuesday also authorize U.S. banks to once again process so-called “U-Turn” fund transfers. This allows them to move money for Cuban nationals—including payments and remittances—so long as the senders and recipients are not subject to U.S. law.

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, said these measures are a step in the right direction. However, he noted a “glaring omission” in the policy: Cuban businesses are still handicapped by a requirement that they use banks in third countries to move their money. “As long as financing, investment, and payments need to be routed through third countries, the Biden-Harris Administration will be constraining precisely the activity it professes to support,” Kavulich said in an email.

There was no sign that Tuesday’s announcement could foreshadow a more significant easing of U.S. sanctions and other restrictions on Cuba, beyond the modest steps that Biden has already taken since he became president. Some analysts have attributed Biden’s cautious handling of Cuba issues to his concern that a softened approach to Havana could hurt him politically among strongly anti-communist Cuban American voters in Florida, a key swing state that he lost to Trump in the 2020 election.

The U.S. officials declined to say whether the administration was conducting a formal review of Cuba’s continuing presence on the State Department’s list of state sponsors of terrorism. This list includes countries that have repeatedly provided support for acts of international terrorism. Being on this list severely restricts Cuba's ability to engage in global financial markets, further complicating its economic situation.

Additionally, the Biden administration's approach to Cuba has been influenced by the broader geopolitical context and domestic political considerations. The administration has to balance its foreign policy objectives with the political realities of domestic opposition, particularly from influential Cuban American communities. These communities have historically held significant sway in shaping U.S. policy towards Cuba, advocating for a hardline stance against the Cuban government.

As the situation evolves, the efficacy of these new measures in genuinely aiding Cuba’s private sector while limiting benefits to the Cuban government will be closely monitored. The Biden administration's cautious yet strategic steps mark a nuanced attempt to navigate the complex landscape of U.S.-Cuba relations, aiming to foster economic opportunities without compromising on principles of democratic reform and human rights.

These developments also underscore the potential for significant economic transformation within Cuba if private enterprises can access international financial systems more freely. It remains to be seen how these regulatory changes will play out in practice and whether they will lead to a broader shift in U.S.-Cuba relations. The success of these measures will likely depend on their implementation and the Cuban government's response, as well as the ongoing political dynamics within both countries.