Durban – The Central African Republic on Wednesday became the first African country to adopt Bitcoin as an official currency, becoming only the second in the world to do so.
A bill governing the use of cryptocurrency was adopted unanimously by parliament last week, said Obed Namsio, chief of staff of President Faustin-Archange Touadera.
Nigel Green, CEO and founder of the deVere Group said: “The president supports this bill because it will improve the conditions of Central African citizens. It’s a decisive step toward opening up new opportunities for our country.”
The Central African Republic is one of six central African countries that share the CFA franc – a regional currency that is backed by France and pegged to the euro.
Last year, El Salvador became the first country to adopt Bitcoin as legal tender, alongside the US dollar.
Green says we can expect an increasing number of countries to follow.
“In January I predicted that at least another three nations, besides El Salvador, would declare the world’s largest cryptocurrency legal tender in 2022. One now already has done so.
“There’s a real sense that momentum is picking up. I expect Bitcoin will be adopted as legal tender in at least one more African and one Central or Latin American country before the end of the year.”
He continues: “In Africa, we believe Tanzania could be one of those countries. Its central bank said last year it was working on a presidential directive to prepare for cryptocurrencies.
“In Latin and Central America, it could potentially be Paraguay or Mexico next.
“A Paraguayan bill moving to regulate the trading and mining of Bitcoin and cryptocurrencies in the country passed the Senate in December, which is widely being regarded as the first step to making Bitcoin legal tender.
“I’m confident that a Bitcoin bill will be introduced to Mexico’s Congress this year. Indira Kempis – a high-profile Mexican senator – is on record as saying they want their country to follow El Salvador’s example.”
Low-income countries have long suffered because their currencies are weak and vulnerable to market changes and that triggers rampant inflation. Many developing countries become reliant upon “first-world” currencies, such as the US dollar, to complete transactions.
However, reliance on another country’s currency comes with its own set of, often very costly, problems. A stronger US dollar or euro will weigh on emerging-market economic prospects, since developing countries have taken on so much dollar and euro-denominated debt in the past decades.
Green said: “Adopting cryptocurrency currently is more attractive to those countries with a track record of financial instability. By adopting cryptocurrency as legal tender these countries then immediately have a currency that isn’t influenced by market conditions within their own economy, nor directly from just one other country’s economy.”
The Independent on Saturday