It is the second country in the world to take the plunge. But this time, the shadow of Russia hangs over the decision. The Central African Republic, the second least developed country in the world according to the UN, has adopted bitcoin as its official currency alongside the CFA franc and legalized the use of cryptocurrencies, the presidency announced on Wednesday, ensuring that it is the first country to do so in Africa. The National Assembly voted “unanimously” by the deputies present the law “governing cryptocurrency in the Central African Republic” and President Faustin Archange Touadéra has promulgated it, assures in a press release the Minister of State and Chief of Staff of the Presidency, Obed Namsio, adding: the Central African Republic is “the first country in Africa to adopt bitcoin as a reference currency”. Problem: The Central African regime is allied with Russia, which could be looking for ways to circumvent international financial sanctions.
On September 7, 2021, El Salvador was the first country in the world to adopt bitcoin as legal tender and the International Monetary Fund (IMF) immediately denounced a decision dangerous for “financial stability, financial integrity and consumer protection. “. “This approach places the Central African Republic on the map of the most courageous and visionary countries in the world”, believes on the contrary the presidency of the Central African Republic, a country in civil war since 2013.
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The shadow of Russia
“The context, with systemic corruption and a Russian partner under international sanctions, incites suspicion,” Thierry Vircoulon, a specialist in Central Africa at the French Institute for International Relations (IFRI), told AFP. “Russia’s search for ways around international financial sanctions calls for caution,” he continued. Indeed, at the end of 2020, a majority of the armed groups which then occupied two thirds of the territory launched an offensive against the power of President Touadéra, who called on Moscow for help. Already present since 2018, Russian paramilitaries came as reinforcements alongside Central African soldiers to repel the rebel offensive.
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“The law was passed by acclamation”, according to the presidency, but some members of the opposition “will attack the law before the Constitutional Court”, declared Wednesday to AFP Martin Ziguélé, former Prime Minister now deputy of the opposition. “This law is a way to get out of the CFA Franc by a means that empties the common currency of its substance (…), it is not a priority for the country, this approach questions: who benefits from the crime?” , he continued.
A volatile currency
“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 “trade activities online”, “all electronic transactions” or even “tax contributions”. The law also provides that “cryptocurrency exchanges are not subject to tax”.
The volatility of bitcoin can make you dizzy. In 2021, prices had soared by more than 150% to a historic high of 68,991 dollars, before collapsing by more than 30%. Even if the market calmed down in 2022, the variations remain very strong: -17% in February, +8% in March and +10% in April. Bitcoin was trading Wednesday at over $39,000. For the time being, only El Salvador and the Central African Republic have adopted bitcoin as legal tender, but other countries are considering doing so, some having initiated legislative processes in this direction, according to the specialized site Coinmarketcap.com.
In Ukraine, the government accepted cryptocurrency donations, raising more than $100 million in the early days of the conflict to fuel its war effort. But Western central banks are also worried about their possible use to circumvent the sanctions imposed on Russia and calls for international regulation are increasing in the United States and Europe. In addition, around the world, many countries are talking about the possibility of creating their own digital currency, which would be centralized.
(With AFP)