CAR the Latest Country to Erect Legal Frameworks for Crypto Regulation
CAR has become the latest country to erect legal frameworks for crypto regulation. Click here to find out what this means for the country.
16 June 2022
18 August 2022
Just a couple of weeks ago it was reported that the Central African Republic (CAR) had become the first African country to legalise Bitcoin and other cryptocurrencies as legal tender. Up until this point the official currency of CAR had been CFA francs, but due to their association with the colonial era and their advantages for France to continue exerting economic control, several countries had demanded the currency be dropped. Crypto, according to economist Yann Daworo, became a way to subvert the problem and give the people of CAR an easier method to convert their finances and make efficient and fast transactions.
There are, as always, some critics who have attempted to paint this movement in a negative light. The biggest point of concern for these critics comes with CAR’s inherent issues as a country. With internet access still underdeveloped in the region, it has been referred to as a rather premature venture, especially with the country’s water and education issues at the forefront of their troubles. Referring to it as premature hits upon the very crux of the argument in favor of Bitcoin adoption, however, since it implies that the acceptance of crypto is something that is going to happen. Whether it happens now or later is exactly CAR’s reason for accepting it. With this in mind, the country’s minister of finance, Herve Ndboda, has responded.
A Slow And Considered Adoption Of Digital Currency
In a statement, Ndboda clarified that in contrast to the reports that Bitcoin is now a legal tender, the country has actually created a regulatory framework which will foster the adoption of digital currencies in the local economy. To understand why this is an important clarification, one must look at the context surrounding crypto integration across the globe.
Thus far, El Salvador is the only country to make crypto legal tender. Their integration, however, has been less thought out. Through a law passed last year, the president of El Salvador, Nayib Bukele, has told the country that they must accept Bitcoin as tender, but without any prior education on cryptocurrency, merchants have a greater risk of struggling with its intricacies.
With CAR following in El Salvador’s footsteps, it is understandable to see how some may be concerned about how CAR will introduce crypto. In their efforts to be the first to introduce and integrate new technology, there could be a chance that the country has brought in crypto without a full understanding of its workings. To suggest this would not be accurate, however. According to the minister of finance, the adoption of crypto is far more thought through and considered in comparison to Bukele. Instead, the government will be considerably accommodating of its own people and merchants, when and if they decide to use crypto.
There Are Still Points of Concern
Despite this more critical approach, there are still concerns about CAR’s feasibility of actually harnessing crypto as a financial asset. As mentioned earlier, internet access is considerably low compared to other countries, with penetration only reaching 11.3% respectively. As well as this, CAR is one of the poorest countries in the world, with various internal conflicts destabilising the economy. The minister of digital economy, post and telecommunications, Justin Gourna Zacko, has argued the opposite.
According to him, the ability to send money from the country has long been a difficult and inefficient task, with this new regulatory bill being introduced to help resolve the issue. Traders and businesses will now be able to make faster and cleaner crypto payments, pushing what was becoming an underground trading scheme into the open. It is also prepared for the risks which come with crypto trading, having made provisions for those who break the law. With money laundering a concerning factor of the bill’s introduction, CAR is prepared to jail offenders for up to twenty years, with a potential fine of nearly one hundred million francs.
With many countries across the world being affected by a weakening financial landscape, it should come as little surprise that there are countries wanting to adopt a new form of digital currency. The price of crypto is billions of dollars higher than it was over ten years ago, and with new updates such as proof of stake on the horizon, that is only expected to rise. It is hopeful, then, that through the legal frameworks and regulations put in place, CAR will ultimately be successful in their venture to make crypto legal tender. With plenty more countries waiting to make their own move, it is a matter of when, not if, the next country follows in CAR’s footsteps.
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