Central African Republic adopts bitcoin as legal tender despite El Salvador woes

  • 28/04/2022
An illustration of bitcoin
The country is just the second in the world to adopt cryptocurrency legally. Photo credit: Getty Images

The Central African Republic (CAR) has followed El Salvador's lead by making bitcoin legal tender in the country, making it the second nation in the world to do so.

The move comes as a new survey in the CAR found bitcoin struggling to gain a foothold, with many Salvadorans having already stopped using the government's Chivo wallet.

CAR President Faustin Archange Touadera signed the measure into law last week, his chief of staff Obed Namsio said in a statement, giving the popular cryptocurrency the same weight as the French-backed CFA franc.

"This move places the Central African Republic on the map of the world's boldest and most visionary countries," Namsio said.

The move hasn't been universally welcomed, however. According to news agency AFP, some legislators are hoping to overturn the decision in the country's Constitutional Court.

"This law is a way of getting out of the CFA franc through a means that guts the common currency," said Martin Ziguele, a former prime minister of CAR.

"It isn't a priority for the country. This move raises the question: who benefits from it?"

CAR is one of the poorest countries in the world with just four percent of the population having access to the internet in 2019, according to the BBC.

The country gained independence from France in 1960, and was plunged into civil war in 2013. France intervened militarily, with Touadera winning the subsequent elections.

Two years ago a rebel coalition threatened a coup, advancing on capital city Bangui, but Russia sent paramilitaries to stop the threat and take back rebel-held territory.

Meanwhile only 20 percent of respondents to a US National Bureau of Economic Research survey in El Salvador are still using the government's cryptocurrency wallet.

The survey, carried out in partnership with Cid Gallup, used face to face interviews with 1800 households in February, and has a two percent margin of error.

According to the study, virtually no-one has installed the Chivo wallet on their phone in 2022, with the majority of downloads occuring in September when bitcoin was first legalised. A $30 bonus was offered to anyone signing up.

"The most important reason not to download the app is that users prefer to use cash, followed by trust issues," the study said.

According to a Bloomberg report, the survey also found no evidence Chivo was being used for payments at any scale, with just 1.6 percent of remittances sent through digital wallets.

Just a fifth of companies reported accepting bitcoin as payment, despite being legally obliged to do so, with just five percent of total sales in bitcoin, the survey found.

The majority of transactions are still carried out using the US dollar, the other currency in El Salvador.