Confusion persists in the aftermath of the Central African Republic’s seeming approval of Bitcoin as legal tender. Protos reported that Bitcoin is not legal tender. Reuters reported it is. Consistent with its editorial neutrality, the Associated Press simply reported that Bitcoin is “authorized.”
Regardless of its legal status, the complicated law is also broader in scope ⏤ enabling the use of crypto assets for various purposes within the country.
The Central African Republic is one of the world’s poorest countries. Its entire GDP sums to less than $2.5 billion annually (US GDP exceeds $22 trillion). Its entire economy averages less than $1,000 per person per year. Although its capital city Bangui is controlled by the ruling party, the rest of the country is controlled by various armed groups.
Below are clarifying details regarding President Faustin Archange Touadera’s newly signed document regarding Bitcoin and other crypto assets.
The Central African Republic’s crypto authorization
- The country’s presidential announcement indicates that the Central African Republic plans to legalize digital asset transactions and adopt Bitcoin as a reference currency.
- Article 11 of the signed law permits a digital asset to serve as an “economic agent” for the payment for goods and services.
- The law allows taxpayers to pay taxes using digital assets through approved platforms. Taxes for crypto trading will remain under the republic’s General Tax Code.
- The law also sets up a trust fund to provide a buffer between cryptocurrencies and Central African Republic’s fiat currency, the CFA Franc.
- It establishes the Agence Nationale de Régulation de Transaction Électronique (ANTE) to regulate crypto ATMs, transactions, and businesses. Governmental accounting will remain in the CFA Franc.
- The law also establishes new regulations for crypto mining within the country.
“Businessmen will no longer have to walk around with suitcases of CFA francs that will have to be converted into dollars or any other currency to make purchases abroad,” economist Yann Daworo told the BBC.
A spokesperson for the world’s three prior “legal tender” announcements ⏤ Blockstream’s Samson Mow, an active participant in the legalization of Bitcoin in El Salvador, Switzerland’s Lugano, and Honduras’ Próspera ⏤ denied any involvement in the Central African Republic’s decision-making. Mow initially observed that the Central African Republic’s new law appeared mostly to clear the way for future regulation versus implementing finalized regulation.
The Central African Republic did not inform the Bank of Central African States (BEAC) before releasing the announcement.
The Central African Republic’s Minister Gourna Zacko praised digital assets’ ability to improve international remittances and decrease the control of central bankers.
“With cryptocurrency, there is no more control of the Central Bank. You have your money, you send to an investor for a business, you receive it in any currency, you can pay with it in Dollar, Euro, CFA, or Naira.”
The Central African Republic was colonized by French invaders. France pegs its franc to the euro. The franc, in turn, is pegged at an exchange rate to the CFA franc. Fourteen African countries, including the Central African Republic, use CFA francs.
Despite concerns about this French colonialist system, the Central African Republic has not directly said that it plans to replace the franc with Bitcoin nor any digital currency.
Close ties with the euro have not spared the Central African Republic from fiat-related economic disasters that are common in developing countries.
Not everyone’s a fan of crypto
Despite Bitcoin’s famous volatility, some Central Africans view Bitcoin as an interesting alternative to the CFA franc. Others, including deputy ministers, warned that declaring Bitcoin legal tender could discourage foreign aid to the Central African Republic.
(The International Monetary Fund previously warned El Salvador against adopting Bitcoin as legal tender and subsequently retaliated by denying one of its bond maturity rollover applications.)
Central African ministers also warned that criminals could use crypto for money laundering, tax evasion, and fraud.
Lack of internet access in many parts of the Central African Republic will also complicate matters. Only 11% of residents have reliable internet access — digital assets typically rely on a connection to broadcast and verify transactions.