The Central African Republic’s move echoes that of El Salvador, which adopted Bitcoin as an official national currency last year. The Central African Republic is the first country in Africa to adopt the cryptocurrency as legal tender, and only the second state in the world to do so.
The Central African Republic is one of the poorest countries in the world. Despite having significant diamond and gold reserves, the country is under developed and has been plagued by armed conflict for decades.
Unanimous parliamentary approval
A bill governing the use of cryptocurrency was adopted unanimously by parliament last week, said a statement signed by Obed Namsio, chief of staff to President Faustin-Archange Touadera, “The president supports this bill because it will improve the conditions of Central African citizens,” Namsio told new agencies.
No forewarning
The Central African Republic uses Central African franc as its currency along with five other nations. The currency is governed by the Bank of Central African States (BEAC). The adoption of cryptocurrency as legal tender took place without input from the BEAC, which released the following statement through a spokesperson, ““The BEAC learned at the same time as the public of the enactment of a new law on cryptocurrency in Central African Republic.” He went to say that the BEAC did not have an official response at the time.
Bitcoin adoption a “serious offence”
Last week, two of the Central African Republic’s former prime ministers signed an open letter expressing their concerns over the adoption of Bitcoin as legal tender without receiving input from the BEAC. The letter referred to the adoption as a “serious offence”.
El Salvador, the first state to adopt Bitcoin as legal tender, faced a wave of skepticism from national and international financial institutions. A Bitcoin bond was proposed by the government, but was eventually postponed in the face of market uncertainty.
African governments have approached cryptocurrency and blockchain technology in a variety of ways. Nigeria’s central bank banned local banks from working with cryptocurrencies before launching the state’s own digital currency, the eNaira. South African regulators have been studying the potential for cryptocurrency and other blockchain technology in the country and Tanzania’s central bank has announced that it is working on a presidential directive to prepare the ground for the emergence of cryptocurrency.