Bitcoin becomes legal tender in the Republic of Central Africa – what is behind it?

Weak infrastructure, only every tenth resident has access to the Internet
Partnership with Russia raises suspicion on bitcoin transactions
Allegations of money laundering and evasion of sanctions

According to the United Nations, the Central African Republic is one of the poorest countries in the world and dependent on international aid. The country is struggling with infrastructure problems and power outages. Only a little more than 10 percent of the population have access to the Internet at all. Business people from the capital are quoted in the media as saying that interest in Bitcoin is low, and that topics such as road construction, infrastructure and security are also more important.

According to Reuters, the Central African Republic government has not responded to inquiries. It promises fiber optic expansion and only says in a statement that the step will make the country one of the “bravest and most visionary countries in the world”. After El Salvador, which introduced Bitcoin as a means of payment back in 2021, the Central African Republic is now the second country in the world to take this step. Any payments, including taxes, should be able to be made in cryptocurrency. Even US blockchain research firm Chainalysis had no data on cryptocurrency usages in the country.

The proximity to Russia is ringing alarm bells

An important warning signal for observers is the proximity of the Central African Republic to Russia: Russian mercenaries have been actively supporting the government in fighting rebel groups in the country since 2018. The Russian mercenaries, accused of countless atrocities, are employed by a European and US-sanctioned company, the Wagner Group. Therefore, all payment transactions are more difficult. This leads to the assumption that the introduction of Bitcoin, like the gold and diamond reserves of the republic, could primarily serve to circumvent the sanctions.

Detachment from the regional monetary union

According to the FAZ, the African Currency Association is also at a loss about the introduction of cryptocurrencies in the country. However, the introduction of bitcoin as a means of payment could also be understood as a message to the states of the regional currency union CFA-Franc.
The CFA franc is administered by the Bank of Central African States (BEAC) and is pegged to the euro. Criticism of the West and Central African currency, which must hold at least 50 percent of foreign assets with the French Treasury and is seen as an obstacle to autonomous economic development, has been voiced for years. For Rahul Shah, a financial analyst at Tellimer, the decision reflects unease with the CFA franc and its colonial overtones. However, it remains to be seen how the move away from a stable currency like the CFA franc can lead to President Faustin-Archange Touadra’s vision of his country’s new era of crypto-based peace and prosperity.

Editorial office finanzen.net

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