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The Central African Republic became the first African country and the second one in the world to adopt bitcoin as its legal currency this week, a move that has raised questions among observers and politicians because of its status as one of the globe’s poorest nations, Agence France-Presse reported.
Lawmakers unanimously approved a bill Wednesday that would make bitcoin legal tender and legalize the use of other cryptocurrencies. The bill also provides for tax-exempt status for cryptocurrency exchanges.
President Faustin-Archange Touadera signed the bill into law with officials saying the move will put CAR “on the map of the world’s boldest and most visionary countries.”
Opposition lawmakers, however, questioned the adoption and noted that it was aimed at undermining the use of the regional currency, the CFA franc. The CFA franc, a currency backed by France and pegged to the euro, is used by six other African countries.
Analysts also wondered if the move was related to CAR’s close ties with Russia, which has faced tough sanctions as a result of its invasion of Ukraine.
Following a rebel insurgency in 2020, Russia deployed paramilitary troops to aid CAR forces, which helped reclaim much of the rebel-held territory.
CAR now follows El Salvador, which adopted bitcoin in September despite warnings from economists and the International Monetary Fund over the risks, such as financial stability.
Even so, others recognize the usefulness of digital currencies as a flexible monetary tool.