The Central African Republic has become the second country in the world to adopt Bitcoin as legal tender. El Salvador previously became the first country to do so in 2021.
Lawmakers in the Central African Republic's parliament have voted unanimously to pass a bill legalizing bitcoin and other cryptocurrencies, according to a statement from the presidential palace. Bitcoin will be considered legal tender alongside the Chinese franc. "This is a decisive step in opening up new opportunities for our country," said Obed Namsio, head of the faustin-Archange Touadera presidential office.
The Central African Republic is rich in diamonds, gold and other valuable minerals, but is one of the poorest and least developed countries in the world. According to the World Bank, about 71 percent of the CENTRAL African Republic's 5.4 million residents lived below the international poverty line in 2020. The landlocked country in the heart of Africa has been plagued by political instability and violence for years.
David Gerard, an independent author who has followed cryptocurrencies closely for years, said: "The big question is who this ruling on cryptocurrencies is for. The Central African Republic has 11 percent Internet penetration. Maybe cryptocurrency will guide payments in the country, but it's not clear how."
The move to make Bitcoin legal tender has been praised by the cryptocurrency community, but it can also be seen as controversial.
El Salvador has faced protests and criticism from the International Monetary Fund after the country introduced a bitcoin law. The IMF urged El Salvador to abandon bitcoin as legal tender, fearing it would pose risks to financial stability and consumer protection.
Bitcoin is a volatile asset, raising questions about its role as a standard payment method. Bitcoin last traded at around $39,686 on Thursday, down 6 percent in the last 24 hours. Bitcoin has fallen about 42% since its all-time peak of more than $68,000 in November 2021.