Tuesday, 28 May, 2024

Central African Republic second nation to adopt Bitcoin as legal currency



The Central African Republic approves the legal framework for economic use of Bitcoin.

The Central African Republic passes a bill to regulate crypto use.
The Central African Republic passes a bill to regulate crypto use. (Getty Images)

The Central African Republic has adopted bitcoin as legal tender, the president's office has confirmed, becoming the second country in the world to do so after El Salvador.

Lawmakers unanimously adopted a bill that made bitcoin legal tender alongside the CFA franc and legalised the use of cryptocurrencies.

President Faustin Archange Touadera signed the measure into law, his chief of staff Obed Namsio said in a statement on Wednesday.

The CAR "is the first country in Africa to adopt bitcoin as legal tender", Namsio said.

"This move places the Central African Republic on the map of the world's boldest and most visionary countries," he declared.

But a leading opposition figure contested the vote and said that the move aimed at undermining use of the CFA franc.

The CAR is one of the planet's poorest and most troubled nations, locked in a nine-year-old civil conflict and with an economy heavily dependent on mineral extraction, much of which is informal.

The text of the new legislation covers use of crypto-currencies, and those who use them, in online trade, "smart contracts… by blockchain technology" and "all electronic transactions".

READ MORE:Will El Salvador become a crypto sanctuary or a cautionary tale?

Cryptocurrencies exchanges are not liable to tax, it adds.

Martin Ziguele, a former CAR prime minister who is now an opposition MP, complained the bill was approved "by proclamation" and some legislators intend to file suit against it at the Constitutional Court.

"This law is a way of getting out of the CFA franc through a means that guts the common currency," said Ziguele.

"It (the law) isn't a priority for the country," he said. "This move raises the question: who benefits from it?"

The CAR is one of six central African countries that share the CFA franc – a regional currency that is backed by France and pegged to the euro. Other members are Cameroon, Chad, Republic of Congo, Gabon and Equatorial Guinea.

Worries

El Salvador became the world's first adopter of the pioneering virtual currency on September 7.

Under it, citizens of the central American country were allowed to use the digital currency – along with the US dollar which has been the official currency for two decades – to pay for any goods or service, using a cyber wallet app.

The introduction was heavily criticised by the International Monetary Fund (IMF).

It warned of "large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection" and with issuing bitcoin-backed bonds.

Many regulators share those concerns, and other critics say that anonymised transfers using crypto are a perfect tool for traffickers and money laundering.

India effectively outlawed crypto transactions in 2018, only for the country's top court to strike down the ban two years later.

China's central bank in September declared all financial transactions involving cryptocurrencies to be illegal.

Huge swings in bitcoin's price make it risky as a store of value and long transaction processing times make it impractical for small purchases.

READ MORE: Crypto adoption reached a ‘tipping point’ in 2021

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