Central African Republic adopts cryptocurrency as legal tender

Central African Republic has adopted Bitcoin as its legal tender. Making CAR the first African country and the second country in the world to make the adoption—after El Salvador.

The nation’s Lawmakers jointly adopted the bill to make bitcoin legal tender alongside the CFA franc and also legalized the use of cryptocurrencies, and President Faustin Archange Touadera signed the measure into law, his chief of staff Obed Namsio said in a statement.

“The purpose of this law is to govern all transactions related to cryptocurrencies in the Central African Republic, without restriction…carried out by natural or legal persons, public or private,” prescribes the text, which refers in particular to “online trading activities”, “all electronic transactions” or even “tax contributions”. Namsio added that “exchanges of cryptocurrencies aren’t subject to tax”.

“The president supports this bill because it will improve the conditions of Central African citizens. It is a decisive step toward opening up new opportunities for our country” — Obed Namsio

Gourna Zacko, CAR’s Minister of Digital Economy and Calixte Nganongo, CAR’s former Minister of Finance and Budget, both proposed the draft law which also seeks to establish a regulatory framework for the domestic cryptocurrency industry.

“With cryptocurrency, there is no more control of the Central Bank. You have your money, you send to an investor for a business, you receive it in any currency, you can dispose of with it in Dollar, Euro, CFA, or Naira,” Zacko said.

It can be quite dizzying to see bitcoin’s volatility. In 2021, bitcoin prices had risen by more than 150% and reached an all-time high $68,991, before falling by more than 30%. Even though the market is now more stable in 2022, there are still strong variations: -17%, +8%, and +10% respectively in February and March. Bitcoin traded Wednesday at $39,000.

Six countries use the Central African CFA Franc. This is a regional currency that is governed by Bank of Central African States. A BEAC spokesperson told Reuters that “The BEAC learned at the same time as the public of the enactment of a new law on cryptocurrency in Central African Republic.” However, the source said that the bank did not have an official response yet.

The African nation which has gold and diamond reserves is yet one of the world’s poorest countries. The country has been ravaged by years of violence and a political crisis, which erupted in the run-up to the 2020 presidential elections. This has had a devastating impact on its economy and caused problems with its international partners.

According to DataReportal, an internet data portal, the Internet penetration rate in the landlocked nation amounts to about 11% of its 5 million inhabitants.

The Nigerian central bank banned local banks from using cryptocurrencies last year, before launching its digital currency, eNaira. Some commercial banks were recently penalized by the Central Bank of Nigeria (CBN), for not complying with regulations that prohibit customers from transacting using cryptocurrencies.

Some forms of crypto trading prohibition are also in place in Cameroon, Nigeria, Gabon, Cameroon, Gabon and Cameroon. In the meantime, crypto trading was banned in Algeria, Egypt and Tunisia.

South Africa regulators are exploring how to regulate cryptocurrencies and other blockchain technologies. Last year, Tanzania’s central banks said it was working on a Presidential directive to prepare for cryptocurrency.

Although Africa is still behind the rest of the globe in crypto adoption, Chainalysis’ report on cryptocurrency in Africa showed that there has been growth. According to the report, the continent’s cryptocurrency market has grown by almost 1200% in the last one year—more than any other region. This increase has put the value of the local cryptocurrency ecosystem at $105.6 million as per the report.

El Salvador made Bitcoin legal tender in September 2021. However, there was a recent surveyThe Chamber of Commerce and Industry (CCI), El Salvador, reported that 86% of businesses contacted had never used Bitcoin to transact.

“Regarding the role of bitcoin as legal tender and its impact on the performance of their businesses, 91.7% of the participants said that the implementation of bitcoin has been indifferent for their business; and 86% report that they have not made sales using the cryptoactive.” the survey stated.

The CCI of El Salvador reports that the above percentages compare to only 3.6% who claim that bitcoin has helped increase their sales and 13.9% who have reported having made bitcoin sales.

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