Central African Republic lawmakers unanimously voted on a bill last week that legalizes the utilization of cryptocurrencies as the country's official legal tender. The news was announced via a statement headed by the African president's chief of staff, Obed Namiso, on Wednesday, Apr. 27, marking the country as the second in the world behind El Salvador in adopting digital currencies as official tender.
Bitcoin and all assorted cryptocurrencies will now act as legal currencies within the country in tandem with the Central African CFA franc, it is already long-existing tender that is used in five other nations. Despite having a large commodity of valuable minerals, mainly gold and diamonds, Africa still remains among the least-developed and poorest countries, with 2020-dated stats from the World Bank proving nearly 71% of Central Africa's inhabitants live below the international poverty line.
To the CFA president, cryptocurrencies and their adoption as legal tender will aid the country in expanding its scope both domestically and abroad. According to Reuters, Namiso explained, "The president supports this bill because it will improve the conditions of Central African citizens." He declined to add anything further but did say that the legislation's passing was "a decisive step toward opening up new opportunities for our country."
Although many in the cryptocurrency sphere see this as a positive move forward and potentially additional lengths toward widespread crypto adoption, others aren't so keen. Two former CFA prime ministers together signed a letter in direct distaste for the legislation's acceptance, calling into question the absurdity of the move without prior notification or accepted guidance from the Bank of Central African States (BEAC), which governs the Central African CFA franc.
One anonymous BEAC spokesperson told Reuters, "The BEAC learned at the same time as the public of the enactment of a new law on cryptocurrency in Central African Republic."
The adoption of crypto in Central Africa could also potentially alleviate some of the more nascent concerns in the country about utilizing the US dollar in global trade. Analysts consider the move potentially positive, as it would then bolster international trade deals per more steady adoptions of crypto across the globe, diminishing overall dependence on the US dollar for necessities, like oil.
But Bitcoin and crypto as a whole are not necessarily the ideal form of tender, given their extreme volatility, which was best witnessed recently in the dramatic fall of prices over the course of several weeks at the start of 2022. Still, experts predict that Bitcoin alone could hit $100,000 by mid-to-late 2022, with several more adding that it may drop to around $75,000 by the end of the year. Bitcoin currently sits at a little under $40,000.
Other African governments look at crypto with some positivity, as Tanzania has for nearly a year been attempting to adopt crypto and its regulation through the country's own central bank. South Africa, too, wants to utilize blockchain technology in more varied ways. While Nigeria blocked the use of crypto for smaller, local institutions, its central bank no sooner adopted its own form of the digital asset, coined eNaira.
As for El Salvador, which adopted bitcoin last year as its legal tender, things haven't exactly been peachy. According to Bloomberg, which cites a survey from the US National Bureau of Economic Research that analyzed Chivo Bitcoin wallet app downloads in the country:
"The most important reason not to download the app, conditional on knowing about it, is that users prefer to use cash, which was followed by trust issues - respondents did not trust the system or Bitcoin itself."
On top of this, El Salvador has also experienced a myriad of protests specifically targeting its institutionalization of the Bitcoin Law, with even the International Monetary Fund pressuring the country to cease its use of the crypto coin due to issues over scams and its potential in destabilizing the country's economy.
With the CAR's still-ongoing domestic issues, specifically rebel violence and underlying corruption, the use of crypto as a stable form of currency may not be the most positive approach to dealing with the country's financial concerns, but it still remains to be seen how exactly President Faustin-Archange Touadera expects to leverage the bill in favor of bolstering the CAR as a whole.
