CAR legalizes bitcoin, introduces digital currency
President Faustin-Archange Touadéra announced on July 3 that his government had officially launched a “new digital system powered by blockchain technology.” CAR is developing its own cryptocurrency, Sango Coin, he said, with plans to create a “crypto island” – a special economic zone in the metaverse – to help transform the country into the “first African cryptocurrency hub” with zero taxation.
“The alternative to cash is cryptocurrency,” Touadéra said. “For us, the formal economy is no longer an option.”
In April, CAR became the first country in Africa (and only the second in the world, after El Salvador) to use bitcoin as a legal tender. Tonga announced similar plans earlier this year, but has not yet passed legislation.
Dreaming big
CAR has been under international sanctions for almost a decade while the civil war rages on, complicating the country’s access to financial markets. The cryptocurrency movement is widely seen as at least partially aimed at helping circumvent sanctions against CAR-allied Russia, but it comes at a particularly unfortunate time as the price of bitcoin has fallen freely and many cryptocurrency platforms are facing bankruptcy.
With 57% of the African population without a bank, Touadéra says he wants the Sango coin to be the currency of CAR’s “new generation”. Since the Sango coin is digital, it does not fall under the control of the central bank.
In parallel with the deeper ties with the heavily sanctioned Russia, Bangui is trying to counteract its economic exclusion from the rest of the world, while reducing the economic dependence on the former colonial power France, which is linked to the CAR by its paper currency, CFA France. However, creating a national physical currency will be difficult, so the decentralized operations center of cryptocurrencies remains attractive despite their volatility.
Beyond CAR
Various countries across the continent are considering legalizing cryptocurrencies, such as Uganda, or making their own official digital money, such as eNaira in Nigeria.
A report from the blockchain data platform Chainalysis last autumn found that Africa’s cryptocurrency market grew by more than 1200% between 2020 and 2021.
Despite the growing popularity of digital currencies, the lack of internet access is preventing them from being used in Africa. CAR is no different; According to the UN, it is the second least developed country in the world, with only 14.3% of the population having access to electricity, let alone the internet.
Touadéra still believes that crypto is the key to the future.
“The ambitious strategy for building a successful economy can only rely on new technologies that have taken the world by storm and taken money to another level,” he said, “with Bitcoin as the key word.”
