Bitcoin as Legal Tender in Central African Republic: What Implications?
By GITTEL AYUK Esq.
Introduction
On the 22nd of April 2022, Central African Republic (CAR) became the second country in the world, after El Salvador, and first in Africa, to adopt Bitcoin (BTC) as a legal tender. While the 7 chaptered and 26-articled law is rich in many ways, the most conspicuous character remains its adoption of Bitcoin (BTC) as Legal Tender and as a Reference Currency. This paper shall appraise the significance of this decision as well as its implications towards the Monetary Sovereignty.
BTC as Legal Tender
Article 10 of the CAR Law on Cryptocurrency makes cryptocurrency a legal tender in CAR. By legal tender, it presupposes that, cryptocurrencies must be accepted whenever presented as payment for any outstanding debt. Article 10 of the Law provides that “any Economic Agent is required to accept cryptocurrencies as a form of payment when they are offered for the purchase or sale of a good or a service” By implication, goods and services can be paid for with cryptocurrency and the venders cannot in any way decline payments in cryptocurrency. In same regard, article 22 allows debts owed in FCFA before the 22nd of April 2022 to be paid with Cryptocurrency. The press release issued on the April 26, 2022 by the Minister of State, Director of Cabinet of the Presidency of the Central African Republic, Obed NAMSIO, acclaimed Bitcoin as the official Currency of the Country. Contrary to the Press Release, the law does not make any express or implied provision of Bitcoin as Official currency of CAR. The law only gives BTC the status of a Legal Tender. By making BTC official currency would imply that CAR would no longer use FCFA as official currency, but this is not the case, as BTC and other cryptocurrencies will be used side by side FCFA.
BTC as Reference Currency
In its article 1(2) and article 4, the CAR Law on Cryptocurrency define BTC as the Reference Currency of CAR. The implications of this can be seen both regionally and internationally. From a regional perspective, this may be perceived as steps by CAR to abandoning the French led Economic and Monetary Union CEMAC . At least, it is the view of Martin Zugul, an opposition Member of Parliament and one-time Prime Minister of CAR . The CAR is a member of the CEMAC , a regional financial bloc made up of six countries, notably; CAR, Chad, Cameroon, Gabon, Equatorial Guinea and the Republic of Congo. These countries use the same currency and are members of the same Central Bank known as BEAC . As members of a single Central Bank, the BEAC is the only institution with the power to issue their Legal Tender. Individual members of the BEAC cannot issue their own currency. This is because by agreeing to become a member of a regional monetary union, a country relinquishes its monetary sovereignty to the Union . As a member of BEAC, the legal tender and official currency of CAR is the FCFA which is backed by France and pegged to the EURO as a reference currency.
Reactions from the IMF and World Bank and BEAC
As of now, neither the IMF nor the World Bank have made any public statements in appraisal of CAR’s Law on Cryptocurrency. However, looking at the IMF and World Bank response towards El Salvador, their future response to CAR becomes Obvious. IMF has strongly criticized El Salvador’s adoption of BTC as Legal Tender, as it claims that it “entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”[1] The world Bank on its part, has turned down several appeals from El Salvador for the World Banks’s assistance in implementing BTC as their Legal Tender. According to the world Bank, the environment and transparency shortcomings are the main reasons it cannot help El Salvador. If one were to anticipate the reactions of the above Organizations towards CAR through the same lens used for El Salvador, it’s obvious that the IMF and World Bank would disapprove of CAR’s move. BEAC, which is the central Bank of CEMAC, has not issued any official statement yet on CAR’s move.
[1] Randa Elnagar, January 25, 2022, IMF Executive Board Concludes 2021 Article IV Consultation with El Salvador, IMF Communications Department,
, Available at, IMF Executive Board Concludes 2021 Article IV Consultation with El Salvador.
Conclusion
CAR’s adoption of BTC as Legal Tender is almost the most talked about subject on the internet recently. With far reaching implications envisaged, the future relationship between CAR, CEMAC nations and France may just be hanging on a balance. Adopting BTC redefines the monetary sovereignty of CAR and its dependence on the FCFA. At the same time, its highly awaited to have the opinions of the IMF, World Bank and BEAC. First, it was El Salvador and now CAR. One can only imagine which country is next?