Cryptocurrency Regulations in the Central African Republic Prior to 2023

Before 2023, the Central African Republic (CAR) took a significant step in the regulation of cryptocurrencies, distinguishing itself as a notable example in the African and global context.

Adoption of Crypto Assets as Legal Tender: On April 22, 2022, the CAR Parliament adopted Law n°22.004, a groundbreaking legislation that officially recognized cryptocurrencies as legal tender. This move marked CAR as the second country globally and the first in Africa to take this step​​.

Mixed Reactions to the Legislation: The adoption of crypto assets as legal tender received mixed reactions. It was praised by some for its progressive approach, but also faced significant criticism from various quarters, including political opposition, the governor of the Bank of Central African States, the World Bank, and the International Monetary Fund (IMF), reflecting the contentious nature of such a policy in the international financial landscape​​.

Provisions of Law n°22.004: The law, encompassing 24 articles organized into seven chapters, aimed to establish a legal framework for secure crypto asset transactions. Key provisions included the coexistence of crypto assets with the Central African CFA Franc (FCFA), their use in electronic transactions, the payment of monetary obligations in cryptocurrencies, and taxation guidelines for crypto trading. Additionally, the law established a National Electronic Transaction Regulatory Agency for overseeing relevant activities​​.

Challenges in Adoption: Despite the legal recognition, the actual use of crypto assets faced practical challenges in CAR, a largely informal economy. Many individuals and businesses preferred cash transactions, and the high volatility of crypto asset prices posed risks of economic insecurity, particularly for merchants accepting cryptocurrency payments​​.

Regional Economic Implications: CAR’s decision to adopt cryptocurrencies as legal tender potentially conflicted with its membership in the Central African Economic and Monetary Community (CEMAC), which has a shared monetary policy and a regional banking regulator that opposed the use of cryptocurrencies. This highlighted the tensions between national and regional financial policies​​.

Opportunities in the African Continental Free Trade Area (AfCFTA): The adoption of crypto assets in CAR could offer opportunities within the AfCFTA, potentially simplifying cross-border transactions and fostering trade among member states. This suggested a possible role for cryptocurrencies in enhancing economic integration across the African continent​​.

In conclusion, prior to 2023, the legislative landscape for cryptocurrencies in the Central African Republic was marked by a pioneering yet controversial decision to recognize digital currencies as legal tender. While this decision positioned CAR as a leader in crypto adoption in Africa, it also presented a range of challenges and uncertainties, particularly in terms of practical implementation, economic stability, and regional financial cooperation.