The Central African Republic (CAR) on Wednesday became only the second country after El Salvador to officially approved bitcoin as its legal tender. The country is the first in Africa to adopt digital currency and is among the poorest in the world despite its rich reserves of gold and diamond.
According to Reuters, a bill governing the use of Bitcoin was passed unanimously by CAR’s parliament last week. Obed Namsio, the country’s chief of staff of President Faustin-Archange Touadera signed a statement confirming the law.
“The president supports this bill because it will improve the conditions of Central African citizens,” Namsio said in a statement to Reuters. He stated further it’s “a decisive step toward opening up new opportunities for our country“.
Along with other former French colonies in Africa, the country is one of the six nations that uses the CFA franc currency. The country is a close ally to Russia and the move to adopt bitcoin as a legal tender might be an attempt to undermine the French-backed CFA admits Russia and France tensions over the country, the BBC reports.
The cryptocurrency was adopted without guidance from the Bank of Central African States (BEAC) prompting two former prime ministers of the CAR to call it a “serious offence.” The move is even more surprising considering the internet penetration in the country is only 4 percent according to 2019 statistics from WorldData. Since bitcoin is a digital currency, the internet is needed to make transactions.
When El Salvador made the move to adopt bitcoin as an official currency last year, the move attracted widespread criticism from economists and the International Monetary Fund (IMF) citing the risk of financial instability. The country was forced to postpone its proposed bitcoin bond in March due to global market disruption, according to Reuters.
In contrast to Salvador, Nigeria the most populous African country has a sterner approach to Bitcoin. The country’s Central Bank of Nigeria (CBN) officially bars local banks from transactions involving cryptocurrencies before launching eNaira, its own digital currency.