The Central African Republic (CAR) has just become the first African country to adopt bitcoin as a legal tender.
The Parliament of the Central African Republic (CAR) today voted unanimously to sign a bill that will recognise Bitcoin and other forms of cryptocurrency as national legal tender, according to a statement posted to the country’s presidential Facebook page. After El Salvador, CAR is just the second country in the world to legalise it.
The bill was earlier proposed by Gourna Zacko, CAR’s Minister of Digital Economy, and Calixte Nganongo, CAR’s former Minister of Finance and Budget. Last week, lawmakers adopted proposals to facilitate the use of cryptocurrencies and create regulatory bodies to oversee the use and adoption as well. At Parliament earlier today, the draft bill was officially adopted and will soon be signed into law.
“With cryptocurrency, there is no more control of the Central Bank. You have your money, you send it to an investor for a business, you receive it in any currency, you can dispose of it in Dollar, Euro, CFA, or Naira,” said Zacko, according to a report by iAfrikan.
How popular is crypto?
Although bitcoin has gained worldwide popularity and usage in the past decade—with global adoption growing by 2300% since 2019 and 103 countries allowing crypto trading—governments and regulators worldwide are still debating its safety. At least 9 countries including China and Qatar, have absolute bans on crypto, while 42 others have levied other forms of prohibition.
Four African countries—Algeria, Egypt, Morocco, and Tunisia—have banned all forms of crypto trading, while 7 including Nigeria, Cameroon, and Gabon have some forms of prohibition regarding crypto trading.
These governments have cited numerous reasons for the bans from fraud and money laundering to tax evasion and terrorist financing.
These prohibitions, however, do not mean that crypto adoption amongst citizens isn’t growing in these countries. In its 2021 Geography of Cryptocurrency Report, Chainanalysis reported that Africa’s cryptocurrency market grew by over 1200% between 2020 and 2021. Kenya, Nigeria, Togo, South Africa, Ghana, and Tanzania are also featured in its Top 20 Global Crypto Adoption Index. In fact, Kenya is leading the continent in peer-to-peer crypto trading.
This is what makes the CAR’s adoption an interesting feat. The country hasn’t topped any charts, the highest crypto transactions don’t originate from it. In fact, at 11%, CAR has the fifth-lowest internet penetration rate in Africa, and this brings into question the feasibility of crypto adoption in the country. As of 2020, only 48% of its population had access to mobile connections, while less than 2.8% were connected to social media. Unlike mobile money, trading, storing and transacting with cryptocurrencies require both smartphone and internet connections, both of which the CAR is low on.
While CAR remains the first and only African country to legalise cryptocurrency for now, other African countries are rushing towards another form of digital currencies, Central Bank Digital Currencies (CBDC) which are digital representations of fiat currencies and unlike crypto, can be regulated by their central banks.