CAR: Will Other African Countries Also Adopt Bitcoin as Legal Tender?
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Loading... - Lara Vossen
- 30 May 2022
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In late April, the Central African Republic (CAR), one of the world’s poorest countries racked with decades-long conflicts, announced a shocking decision: it was adopting Bitcoin (BTC) as legal tender.
It became the second country in the world to do so after the Central American country, El Salvador, which took the first move in September 2021.
Although the International Monetary Fund (IMF) kicked off against El Salvador’s move at the time, saying Bitcoin as legal tender increased the country’s risk of financial instability, CAR in its announcement said the move places it “on the map of the world’s boldest and most visionary countries.”
Despite the worries and fear that trailed this action, one question remains: Will there be a ripple effect across Africa?
This question is now even more pertinent as monetary authorities and central banks from Africa dominated the list of 44 countries recently invited by El Salvador’s President, Nayib Bukele, to the country’s Bitcoin Conference.
Bukele had said the meeting was “to discuss financial inclusion, digital economy, banking the unbanked, the Bitcoin rollout and its benefits in our country.”
Will other African countries be inspired by CAR and El Salvador’s step to adopt Bitcoin or other cryptocurrencies as a legal tender? Or will they double down on their clampdowns on cryptocurrencies as already being seen?
Is Africa ripe for Bitcoin as legal tender?
Africa’s Crypto Regulation Landscape
Although Africa is still catching up with the rest of the world in terms of total turnover from cryptocurrency trading, the region has one of the highest crypto adoption rates in the world.
This milestone is mostly being supercharged by peer-to-peer retail-sized crypto transactions.
According to the Brookings Institution, Africa is the fastest-growing cryptocurrency market among developing economies and the third-largest growing market in the world.
Chainalysis 2021 Global Crypto Adoption Index also ranks Kenya, South Africa and Nigeria among the top 10 countries in the world in terms of cryptocurrency use. However, not all countries in the continent are open to cryptocurrencies.
According to a report by the United States’ Library of Congress (LoC), of the 51 countries that have implemented a ban on cryptocurrencies, 23 are African countries.
While 4 African countries, Algeria, Egypt, Morocco and Tunisia, have placed an absolute ban on cryptocurrency, 19 countries, including Nigeria, Africa’s largest economy, have placed implicit restrictions on digital assets.
In fact, the African Blockchain Report 2021 published on Monday by Crypto Valley Venture Capital, a Swiss blockchain investor, put these figures on 6 countries for legal sanctions on cryptocurrencies, 27 with implicit bans, 4 with absolute bans, and 17 with uncertain regulations.
In February 2021, the Central Bank of Nigeria, the apex monetary authority of Africa’s largest economy, placed an implicit ban on cryptocurrencies in the country when it ordered commercial banks in the country to shut down all cryptocurrency-related accounts.
Nonetheless, Nigeria some weeks ago issued new rules on the issuance, offering and custody of digital assets, classifying cryptocurrency as digital assets. However, this move has been criticized as stifling the local cryptocurrency industry.
With struggling currencies, double-digit inflations and a divided cryptocurrency industry, is crypto as legal tender an option for Africa? Read More...
