The Central African Republic Officially Makes Bitcoin Legal Tender

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It’s not just El Salvador anymore. Last week, the Central African Republic made Bitcoin legal tender, becoming the second country in the world to do so. It’s the first African republic to legalize Bitcoin, which will now coexist with the official fiat money currency, the CAR Franc. The move comes after the government introduced a regulatory cryptocurrency framework on April 27.

So far, the CAR Franc was the only official currency in the country and five others in Africa. It is governed by the Bank of Central African States (BEAC), and now has Bitcoin as its running mate. People in the country can now freely use Bitcoin to pay for goods and services, just like they do in El Salvador. The BEAC has been surprisingly mum on the matter ever since the regulatory framework was introduced.

A Decisive Step Toward New Opportunities for the Country

This is a huge move for the CAR and Africa in general. Bitcoin was already popular on the Black continent for years, and with this decision, the African country is opening up to many new financial opportunities. President Faustin-Archange Touadera’s chief of staff Obed Namsio said as much in an official statement, calling it a ‘decisive step’ toward a better future for the Central African Republic.

It’ll surely be interesting to see if and how Bitcoin helps the country’s economic status. The CAR ranks among the poorest countries in the world, even though it’s rich in diamonds, gold, and other valuable minerals. In the past decade, the country has been thrown in turmoil and chaos, with civil unrest and political instability.

The new regulatory framework raises a big question – who will benefit the most from it? With Internet coverage in the country at a meager 11%, it’s not clear if people will buy into it. Sure, there are many young people interested in crypto, but the general population will be skeptical. It’s a controversial decision akin to the one made by El Salvador, another country that’s been struggling financially.

Volatility a Big Problem

Even though the CAR hasn’t dropped its official fiat money currency as legal tender, Bitcoin’s famous volatility will prove a problem with the adoption. It’s a big question mark about its role as a standard payment method, especially in under-developed countries. Currently under $40,000 and with prices dropping in past weeks, the cryptocurrency has lost a big portion of its price that almost hit $70,000 last November.

Of course, that could change soon, but for now, experts are cautiously optimistic. The CAR should benefit from Bitcoin’s adoption if it manages to reduce the dependence on the US Dollar. The current political leaders have a close ally in Russia, a country that has provided the government with direct assistance in the past.

Armed groups are always looking to overthrow the government, and Russia paramilitary groups have helped president Touadera repel them so far. Mercenaries from the Kremlin-backed Wagner group have been reported as operating in the country. This controversial paramilitary group has been accused of many crimes, and so far, the government has stayed silent on its Russian links.

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Author: Harper James