On Friday, Central Africa’s regional banking organization issued a warning about its restriction on cryptocurrencies only weeks after the Central African Republic (CAR) declared bitcoin lawful money.
The Banking Commission of Central Africa (COBAC) supervises the economic sector in the six nations that make up the Central African Economic and Monetary Community (CEMAC).
After the failure of TerraUSD, a so-called stablecoin, which sent shockwaves through the markets on Friday, the statement came as cryptocurrency markets were struggling to recover from significant losses.
On April 27, the presidency of the Central African Republic reported that they had approved bitcoin for use as a form of legal money. Thus, CAR has become the second country to adopt crypto.
Analysts and crypto specialists were perplexed by the move. They expressed their confusion that it took place in one of the world’s poorest nations, where internet use is low, violence is common and unreliable energy.
The Central Africa Republic fails to highlight the reason for adopting bitcoin
The administration has revealed minimal specifics about their reasons for adopting Bitcoin. There are still many unanswered issues regarding the execution.
Although he was aware of the news due to his exposure to it in the media and social media, government spokesman Serge Ghislain Djorie told Reuters that the Central African Republic had not received any official notice from COBAC about a crypto ban. Djorie was speaking to Reuters by phone.
For now, we will hold on for official communication before giving our position. However, It is essential to comprehend that every state possesses its sovereignty,
According to a statement released by the banking commission on Friday, they conducted an extraordinary meeting on May 6 to investigate the effects of cryptocurrencies in the zone.
The document revealed that the ownership of cryptocurrencies in any form is prohibited. The exchange, conversion, or transaction settlement linked to cryptocurrencies is illegal. Thus, using cryptocurrencies as a method for evaluating assets or liabilities are some of the activities that are prohibited. Central Africa Republic has maintained its a sovereign country and it is responsible for its financial decision.
Bitcoin as a legal tender will hinder financial stability
Earlier, the Bank of Central African States petitioned the CAR government. The petition intended to convince them to overturn legislation that declared Bitcoin legal money. The bank issued a public warning in a letter last week. It said that the action violated its rules and had the potential to damage the region’s monetary stability.
COBAC has a reservation that declaring bitcoin a legal tender will affect the regional currency. We can’t allow bitcoin to jeopardize the central African Franc. The financial instability it might cause is too much, and CAR has to see sense.
The regulator also pointed out that the activities of CAR are suspicious. They noted that CAR’s move points to escaping financial supervision. They want to take advantage of the decentralization of cryptocurrency.
The agency believes that the Central African Republic’s move to use Bitcoin as legal cash violates a community accord. Still, it admits that it is challenging to prevent crypto transactions despite the regulations. The use of crypto is based on individuals’ consent to use it as a payment method.
The COBAC is particularly concerned that crypto may make it simpler for criminals to launder money. Besides, CAR is famous for civil wars, and crypto can fund terrorism or rebellions in the area.
Since 2013, the CAR has been riven by violence between rebels and government forces. Cameroon is fighting dissidents, while Chad faces an Islamist insurgency that is expanding.
Last week, the Employers Union of Cameroon said that armed organizations in central African countries use Bitcoin to conceal their financial operations. According to the union, Cameroon recorded $260 million in Bitcoin transactions in 2021, 40 percent of which went to rebels in western areas.