The Central African Republic has adopted bitcoin as legal tender, the president’s office announced on Wednesday, becoming the second country in the world to do so after El Salvador.
Lawmakers unanimously passed a bill making bitcoin legal tender alongside the CFA franc and legalizing the use of cryptocurrencies.
President Faustin Archange Touadera signed the measure into law, his chief of staff Obed Namsio said in a statement.
CAR “is the first country in Africa to adopt bitcoin as legal tender,” Namsio said.
“This decision puts the Central African Republic on the map of the boldest and most visionary countries in the world,” he said.
But a leading opposition figure challenged the vote and said the move was aimed at undermining the use of the CFA franc.
The CAR is one of the poorest and most troubled nations on the planet, locked in a nine-year-old civil conflict and with an economy heavily dependent on mining, much of which is informal.
The text of the new legislation covers the use of cryptocurrencies, and those who use them, in online commerce, “smart contracts…by blockchain technology” and “all electronic transactions”.
Cryptocurrency exchanges are not subject to tax, he adds.
Martin Ziguele, a former Central African prime minister turned opposition MP, complained that the bill had been approved “by proclamation” and that some lawmakers intend to file a complaint against it in the Constitutional Court.
“This law is a way out of the CFA franc through a way that empties the common currency,” Ziguele said.
“This (the law) is not a priority for the country,” he said. “This decision raises the question: who benefits?
The CAR is one of six Central African countries that share the CFA franc, a regional currency backed by France and pegged to the euro. The other members are Cameroon, Chad, the Republic of Congo, Gabon and Equatorial Guinea.
WorriesEl Salvador became the first global adopter of the pioneering virtual currency on September 7.
Under it, citizens of the Central American country were allowed to use digital currency – along with the US dollar which has been the official currency for two decades – to pay for any good or service, using a cyber wallet application.
The introduction was strongly criticized by the International Monetary Fund (IMF).
He warned of “the significant risks associated with using bitcoin for financial stability, financial integrity and consumer protection” and issuing bitcoin-backed bonds.
Many regulators share these concerns, and other critics argue that anonymous transfers using crypto are a perfect tool for smugglers and money launderers.
India effectively banned crypto transactions in 2018, only for the country’s top court to overturn the ban two years later.
China’s central bank said in September that all financial transactions involving cryptocurrencies were illegal.
The 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.
However, the usefulness of digital currencies as a flexible monetary tool is also recognized. The major central banks are studying the possibility of setting up a virtual currency in a regulated environment.
Troubled country The CAR has seen few moments of peace since its independence from France in 1960, and ranks 188th out of 189 countries in the UN’s Human Development Index, a benchmark for prosperity.
In 2013, the country plunged into a civil war that developed largely along sectarian lines.
The conflict subsided after the military intervention of France and the holding of elections won by Touadera, although for years armed groups dominated most of the territory of the CAR.
In 2020, a coalition of rebels advanced on the capital Bangui, threatening to overthrow Touadera ahead of new elections.
Russia sent paramilitaries to help repel the threat and then reclaim much of the rebel-held territory.
The agents are described by Bangui as military advisers but by France, the UN and others as mercenaries from the Kremlin-backed Wagner Group, which has been accused of abuse.