The Central African Republic has become the first African country to adopt bitcoin as its legal tender, becoming the second country in the world to do so after El Salvador. El Salvador became the first country to adopt Bitcoin as an official currency in September 2021 – a move criticised by many economists, including the International Monetary Fund, which said it increased the risk of financial instability.
CAR is one of the world’s poorest countries, but it is wealthy in diamonds, gold, and uranium. It has been devastated by conflict for decades and is a staunch Russian ally, with Wagner Group mercenaries assisting in the fight against rebel troops.
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According to a statement posted on the country’s presidential Facebook page, the Central African Republic’s Parliament voted unanimously today to sign a bill recognising Bitcoin and other forms of cryptocurrency as national legal tender.
Gourna Zacko, CAR’s Minister of Digital Economy, and Calixte Nganongo, CAR’s former Minister of Finance and Budget, had previously introduced the measure. Last week, lawmakers passed legislation to make it easier to use cryptocurrencies and establish regulatory agencies to regulate their usage and adoption. Parliament officially adopted the draft measure earlier today, and it will shortly be signed into law.
Others have expressed concerns that cryptocurrencies like Bitcoin could make it easier for criminals to launder money and that they are environmentally harmful due to their high energy consumption. According to the statement, the decision places CAR “on the map of the world’s most daring and visionary countries”.
The internet is required to utilise any cryptocurrency; however, according to the WorldData website, only 4% of people in CAR have internet access in 2019. At the same time, less than 2.8% were connected to social media. Unlike mobile money, trading, storing, and transacting with cryptocurrencies require both smartphone and internet connections, both of which the CAR is low on.
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Like most other former French colonies in Africa, the country uses the CFA franc as its currency, which France backs. Some perceive Bitcoin’s acceptance as a ploy to destabilise the CFA, which is in the midst of a power struggle between Russia and France over the resource-rich country.
While the Central African Republic remains the first and only African country to legalise cryptocurrency, for the time being, other African countries are rushing to adopt central bank digital currencies (CBDCs), which are digital representations of fiat currencies that, unlike cryptocurrency, can be regulated by central banks.