The African country of Central Africa Republic has adopted Bitcoin as legal tender alongside the CFA franc following the example of El Salvador.
The Central African Republic has become the world’s second country to embrace bitcoin as its official currency, following El Salvador’s decision last year.
According to a statement from the presidency, lawmakers in the CAR’s parliament voted unanimously to pass a bill legalizing bitcoin and other cryptocurrencies.
Bitcoin will be accepted as legal tender alongside the CFA franc in Central Africa.
According to Reuters, President Faustin-Archange Touadera’s chief of staff, Obed Namsio, hailed the decision “a decisive step toward opening up new opportunities for our country.”
The Central African Republic is rich in diamonds, gold, and other valuable minerals, yet it is one of the world’s poorest and least-developed nations.
According to the World Bank, over 71 % of CAR’s 5.4 million people lived below the international poverty level in 2020.
For years, the landlocked country in the heart of Africa has been wracked by political unrest and violence.
“The big question is who the cryptocurrency ruling is for,” said David Gerard, an independent author who has closely followed crypto over the years.”
“Internet coverage in the CAR is 11%. Perhaps the government has been told that this will bootstrap payments in the country, but it’s not clear how.”
The decision to make bitcoin legal tender was welcomed as another step toward mainstream adoption of cryptocurrencies by the crypto community.
It can, however, be perceived as controversial. El Salvador saw protests after adopting the Bitcoin Law, and the country was also chastised by the International Monetary Fund.
El Salvador has been encouraged by the International Monetary Fund (IMF) to abandon bitcoin as legal tender, citing worries about the risks it poses to financial stability and consumer protection.
Bitcoin is a highly volatile asset, which raises concerns about its suitability as a payment method. It was last trading at $39,686 on Thursday, down 6% in the previous 24 hours. Since November, when it reached an all-time high of over $68,000, the cryptocurrency has lost nearly 42% of its value.
Many Western nations have expressed concern about Russia’s possible use of cryptocurrency to avoid sanctions in the aftermath of its invasion of Ukraine.
According to the UN, CAR is a close ally of Russia, with Russian mercenaries providing direct assistance to the government.
Experts believe the move will help small countries like the Central African Republic (CAR) minimize their reliance on the US dollar for global trade.
The dollar has been the global oil currency since the 1950s, according to Ransu Salovaara, CEO of crypto platform Likvidi.
“Oil dependence is a major issue now, because of the Ukraine and the SWIFT banking ban, so global, unstoppable cryptocurrencies like bitcoin can really shine,” he added.