On Wednesday the Central African Republic announced that Bitcoin would become legal tender. A press release from the office of President Faustin-Archange Touadéra (pictured) noted his ‘satisfaction and enthusiasm’ for the unexpected change in economic policy. The decision makes the Central African Republic the second country to adopt Bitcoin after El Salvador. Whilst the move came as a surprise, this did not prevent cryptocurrency fans being jubilant about the news.
🚨 Official press release from the Central African Republic states Bitcoin is a official currency (original document and a google translated version below) @BTC_Archive @DocumentingBTC @APompliano @gladstein @LordFusitua @Dennis_Porter_ @BitcoinMagazine pic.twitter.com/U5vqdz4oB5
— Oliver Koblížek ⚡ (@Stromens) April 27, 2022
Finance Minister Herve Ndoba told Bloomberg that his country would establish a legal framework and a regulator to oversee the use of cryptocurrencies. The motion to do this was unanimously approved by the country’s National Assembly.
The adoption of Bitcoin will not affect many people directly, as less than 11 percent of the Central African Republic’s 4.7 million population has access to the internet, per figures from the International Telecommunication Union. The Central African Republic is one of the poorest countries in the world, and is the very poorest by some measures. This is despite the country having substantial natural resources including diamonds, uranium, timber, gold and crude oil. The Central African Republic can also generate considerable electricity from hydropower, which may be harnessed for the mining of Bitcoin.
Ndoba played down any suggestion that the Central African Republic would base its legal framework on the model adopted in El Salvador. The two countries differ in many respects, although they both could use renewable energy to create their own Bitcoins. El Salvador’s ambitious plans sought to encourage the entire population to use Bitcoin, which makes sense for a country where a large slice of the national economy comes from international transfers of money earned by Salvadorian expatriate workers. The Central African Republic does not have the infrastructure to support the widespread use of Bitcoin, but it will want to be able to export its mineral wealth without any interference from foreign powers.
Bitcoin now joins the Central African CFA Franc as one of two currencies with legal recognition in the Central African Republic. The Central Africa CFA Franc is a holdover from French colonial rule; it is used by six African countries and its value is pegged to the Euro. This puts the African countries that use the Central African CFA Franc at a disadvantage because their economies are heavily influenced by economics in the Eurozone although they have no control over decisions made by the European Central Bank. Economic stagnation within the EU suggests this could be a good time to decouple African economies from former colonial powers, but more importantly the Central African Republic will have noticed the central role of the international banking system in the imposition of sanctions upon Russia. President Touadéra has closely allied himself to Russia, and relies upon Russian weapons and training to sustain his army in the midst their ongoing struggle with insurgents. A cryptocurrency like Bitcoin can potentially allow the Central African Republic to sell its minerals to any willing buyer with less risk of Western democracies being able to impose obstacles.