The Central African Republic (CAR) has raced ahead of other top crypto runners, such as Nigeria and Kenya, to become the continent’s pioneer in making Bitcoin a legal tender.
The other country on the globe to employ BTC as a legal tender is El Salvador. However, the uptake since the adoption of BTC has been modest.
In a unanimous vote, the CAR parliament passed legislation that allowed the adoption and use of BTC. The move was driven by the need to address the country’s currency and exchange rate issues.
According to Yann Daworo, an economist in the Central African Republic’s capital, Bangui, businesspeople will no longer need to walk around using boxes of cash, which requires conversion into dollars before processing payments abroad.
In a recent report released by Chainanalysis, a blockchain data platform, Africans received USD 105.6 billion in payments at the height of COVID-19 pandemic (2020-2021). This was a huge rise of 1200% compared to the year abroad.
CAR Follows El Salvador in Making BTC a Legal Tender, Critiques Raise Concern
According to President Faustin-Archange Touadera, BTC adoption offers a decisive step in opening new opportunities for the nation.
Faced with a serious security situation, which the International Monetary Fund (IMF) calls fragile, CAR adopting BTC is a way of wanting to try something new for the financial challenges. CAR, together with the other six countries, from Gabon to Equatorial Guinea, use the Central African CFA unit of exchange.
The adoption of Bitcoin as a legal tender by CAR is, however, not without some criticism. Some have indicated that the adoption of Bitcoin is working right into the hands of Russian warlords.
The Economist Intelligence Unit indicates that CAR is a failed state where most of the territories are under the control of rebel groups. However, the government retains the main cities, such as the capital, with the assistance of Russia.
One of the most vocal critics is Didier Mary, a crypto skeptic and consultant in fintech and digital transformation, who said that Bitcoin will not work in CAR and will only facilitate money laundering.
“It can’t work, won’t work, but it surely pleases the Russian overlords over there to show the United States Dollar domination is dead …” she emphasized.
Cryptos and CBDs in Africa
In Africa, most central banks have banned banks from processing crypto-related transactions. However, this move has emboldened the black market. For example, peer-to-peer trading platforms like LocalBitcoins have been pushing up the crypto adoption in Kenya and Zimbabwe.
South Africa is the other nation in the continent that only falls short of embracing BTC as a legal tender. Here, Bitcoins and cryptos are regulated and taxed. For other countries, the focus is on Central Bank Digital Currencies (CBDC), but their adoption is limited by the low penetration of smartphones, according to the Kenya Central Bank. Nigeria led the way with its CBDC, and now Ghana is working on its eCedi.