The Central African Republic has passed a new law to regulate bitcoin and other cryptocurrencies. There is still some ambiguity, but there may also be recognition of bitcoin as the country’s official currency. According to the Minister of Finance, the purpose of the law is to facilitate the use of cryptocurrencies in the economy.

Forbes Monaco reported this weekend that the Central African Republic, a country in Central Africa with a population of about 5 million, has unanimously passed a bill to regulate and recognize bitcoin and other cryptocurrencies as a means of payment.

The regulation is confirmed by various sources, but there is still uncertainty about whether there is really any recognition of bitcoin as an official currency.

The alleged legal text is circulating on Twitter. It only describes the regulation of cryptocurrencies in general. It says nothing about recognizing bitcoin as an official currency.

However, a press release from the Central African Republic states that there is recognition of bitcoin as the country’s official currency and calls it a historic decision.

A tweet from President Touad??ra also speaks of bitcoin as legal tender.

Legislative text

There are several noteworthy features in the law. For example, all economic actors would be legally obliged to accept payments in crypto for goods and services. The text does not mention cryptocurrencies by name.

In addition to private initiatives, the state guarantees funds to carry out cryptocurrency transactions. Also, the state will allow instant conversion from crypto to local currency, and vice versa. The market price is used and tax is levied on the conversion.

A new regulator has been established, called Agence Nationale de R??gulation des Transactions Electronique (ANRTE). Cryptocurrency service providers are subject to tax and must register with the regulator.

Taxes can be paid with cryptocurrencies, provided that payments are made through authorized platforms. The local currency is used as the unit of account.

Service providers who violate the law face severe penalties: imprisonment of up to 20 years and fines ranging from 100,000,000 CFA francs (??15,500) to 1,000,000,000 CFA francs (??155,000).

Economic growth

On the website of a network for human rights journalists, R??seau des Journalistes pour les Droits de l’Homme en Centrafrique (RJDH-RCA), it can be read that the Minister of Digital Economy, Post and Telecommunications, together with the Minister of Finance have introduced the bill to bring about strong and inclusive economic growth.

The law aims to achieve that by creating legal frameworks for cryptocurrencies, especially bitcoin, and creating a favorable environment for business and other economic actors in the sector. RJDH-RCA is not reporting on a recognition of bitcoin as an official currency.

Advantages

Justin Gourna Zackom, the Minister of Digital Economy, Post and Telecommunications, does point out the benefits of bitcoin transactions in an attached quote. ?ǣFor individuals, sending money from elsewhere to the Central African Republic is very difficult and also receiving money from the Central African Republic is complex because it is controlled, it goes through the Central Bank and there are many things?ǥ said the minister.

The Central African Republic is a former colony of France and uses the CFA franc, an originally colonial variant of the French franc over which France still exercises a lot of influence. There is much criticism of the CFA franc financial system and some speak of a kind of financial neo-colonialism.

?ǣWith cryptocurrencies, there is no longer any control by the Central Bank. You have your money, you send it to an investor for a company, you receive it in any currency, you can have it in Dollar, Euro, CFA or Naira ,?ǥ continued minister Zackom.

Objections

The French news radio RFI reports in an article that the opposition had strong reservations. Some opposition members did not take part in the vote. There were concerns about the risks of money laundering, tax evasion and scams. The opposition was also concerned about the possible image damage that the country would incur and the financial consequences that could have. Despite this, most news sources speak of unanimous support for the law.

Regulating payments

Bloomberg journalists spoke to Finance Minister Ndoba about the developments. According to the minister, it is not the intention that the Central African Republic follows the example of El Salvador. El Salvador recognized bitcoin as legal tender last year and it has been one of the country’s two official currencies ever since. It seems to insinuate that the Central African Republic does not recognize bitcoin as an official currency. This is contrary to the aforementioned press release.

Ndoba did confirm the regulation and that a supervisor will be appointed. According to him, the legal frameworks aim to facilitate the use of cryptocurrencies in the economy. ?ǣThere is a common understanding that sub-Saharan African countries are often lagging behind when it comes to adopting new technologies ,?ǥ Ndoba said, ?ǣThis time they can say that our country is actually one step ahead.?ǥ

Uncertainty

So there is still some ambiguity about the new law. Since the legal text does not mention the recognition of bitcoin as an official currency, this does not seem to be the case. Yet the press release and tweet of President Touad??ra state very explicitly that this is the case.

In any case, it seems that the Central African Republic wants to embrace the use of bitcoin and cryptocurrencies in the country and open the doors to the sector.

Central-African Republic

The Central African Republic has about 5 million inhabitants and is located in Central Africa. It is one of the poorest countries in the world and 79% of the population lives in poverty. The standard of living is very low: on the list of the United Nations Human Development Index, the country is number 188 out of 189. The political situation is unstable after years of conflict and the government is accused of a multitude of human rights violations.

Only 13.75% of the population in the Central African Republic has a bank account. Bitcoin basically allows them to make and receive payments outside of the banking system.

Still, the question is whether bitcoin is a solution in this case. According to the World Bank, in 2016 only 4% of the population used the internet. Mobile telephones are more common: 33% of the population had a mobile telephone subscription in 2019, but it is not clear whether this only concerns telephony or also internet. Bitcoin may be a godsend for part of the population, but mandatory acceptance of cryptocurrencies in these circumstances seems challenging to say the least.

The law may have other positive side effects. For example, a favorable business climate can attract investment from the sector and publicity can also stimulate tourism. For example, the economy in El Salvador grew by more than 10% last year despite the COVID crisis and tourism grew by 30%.

Bitcoin adoption among the African population is growing at a rapid pace and Africa increasingly appears to be the new adoption hotspot, with Nigeria leading the way.

s: United Nations[1][2], license CC BY-NC-ND 2.0, Wikimedia, license CC BY-SA 3.0