Recently, the Central African Republic [CAR] declared to make Bitcoin a legal tender, becoming the only second nation after El Salvador to embrace the asset. The news hogged significant limelight with crypto proponents hailing the landmark move.
However, reports soon began to circulate that the Central Bank was kept out of the loop as the government hurriedly announced the ambitious plan.
According to Bloomberg coverage, the Bank of Central African States, which oversees the Central African CFA franc, the regional currency used by six nations in the continent, was not notified, the spokesman for the bank said Friday, without further elaborating.
That said, critics began to mount, particularly, the nation’s opposition parties who raised questions about the feasibility of the move and criticized the administration for its plan to adopt a currency that consumes huge amounts of electricity.
There were also concerns that this might invite trouble with the International Monetary Fund and donor countries. Opposition leader and former Prime Minister Anicet-Georges Dologuélé in a telephonic call said,
“It will be difficult to implement as CAR doesn’t have the capacity or the knowledge to enforce such a law. We lack connectivity, expertise, even power is a problem.”
On the other hand, the government said that legalizing Bitcoin as a currency will lead CAR to the path of economic recovery, growth, and stability that has taken a beating due to a decade-long civil war.
But the administration snubbing a key stakeholder is surprising as it might require the central bank’s support to create a Bitcoin wallet.
Can Bitcoin solve the African nation’s woes?
The latest move reflects a growing discontentment over former colonial power France’s hold to the CFA franc, which is pegged to the euro. The regional bank must maintain at least 50% of foreign assets with the French Treasury, an arrangement that’s being widely attributed to a neo-colonial practice.
But in a nation where a meager 11% of the population has internet accessibility, mass cryptocurrency adoption is like a far-fetched dream, feels Nevellan Moodley, technology head at BDO Financial Services.
Despite the hurdles, cryptocurrency usage in the African continent has the highest adoption rate globally. A recent report by cryptocurrency exchange KuCoin showed digital asset transactions surged by a whopping 2,670 percent in 2022.