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The Central African Republic has become the second country to adopt Bitcoin as legal tender, after being signed into law by the country’s President.
Parliamentarians in the country unanimously adopted a bill that made Bitcoin legal tender alongside the country’s fiat currency, the CFA franc, and legalised the use of crypto-assets.
"This move places the Central African Republic on the map of the world's boldest and most visionary countries," the presidential office said in a press statement.
The new legislation covers the use of crypto-assets and those who use them, including online trading, smart contracts and all electronic transactions.
The bill did meet some opposition from the country’s lawmakers, who believe that this is an attempt to undermine the CFA franc, which is a common currency used by regional neighbours Cameroon, Chad, Republic of Congo, Gabon and Equatorial Guinea.
The Central African Republic is one of the poorest countries in the world, according to the International Monetary Fund (IMF).
It is also locked in a decade-long civil conflict, which has spurred the country into forming close ties with Russia.
The private mercenary group, the Wagner Group, which has close links to Russia’s political and military leadership, is assisting the government with fighting rebel groups.
Regional crypto shift
The Central African Republic is not the only African nation that is keen to establish a legal footing for Bitcoin and crypto-assets more generally.
Earlier this month, neighbours Cameroon, the Democratic Republic of the Congo (the DRC) and the Republic of the Congo announced their intention to adopt cryptocurrency and blockchain-based solutions to drive economic growth.
In those three countries, The Open Network (TON), a layer one proof-of-stake blockchain, is tipped to become the main driver of their crypto transformation.
The DRC, for example, has confirmed that it is considering a new national stablecoin built on the TON blockchain.
TON said it has been engaging with all three countries independently and has developed cryptocurrency and blockchain solutions for each nation.
It also said the three countries will each undertake a phased transition to adopting cryptocurrency as a central pillar of their economic and payments infrastructures.
On the shoulders of El Salvador
The Central African Republic is the second country to make Bitcoin legal tender, following in the footsteps of El Salvador, which did the same in September last year.
El Salvador made international headlines with the decision, which the country's President, Nayib Bukele, said was driven by the prospect of improving opportunities for innovation, financial inclusion, tourism, investment and economic development.
However, El Salvador’s legislation prompted concern from the IMF, which called on the country to reverse its decision.
In an assessment of El Salvador’s outlook published in January, the IMF said that the adoption of a cryptocurrency as legal tender entails "large risks for financial and market integrity, financial stability, and consumer protection", adding that it can also create "contingent liabilities.”
However, the IMF's warning did not seem to trouble President Bukele, who tweeted a meme from a Simpsons episode in a defiant response.
On April 28, lawmakers in Panama also took steps to formalise the legal status of crypto-assets as the National Assembly approved a bill to regulate the use of crypto-assets, in a move that will also make it possible to pay taxes in crypto.
The bill covers crypto-asset trading, new payment systems, issuance of digital securities, the tokenisation of precious metals and other use cases.
Under the new legislation, Panamanians will be able to use crypto-assets as means of payment for any civil or commercial activity not prohibited by law in the country.
