Cuba regulates bitcoin, the Central African Republic makes it legal tender

The latter indicates that it will examine the legality, the socio-economic interest of the initiative, the characteristics of the project, the responsibility of the applicants and their experience in the activity in the assessment of a license application.

These licenses will be valid for one year and can be renewed for a second year, due to the experimental and innovative nature of this type of activity .

Last year the President Miguel Diaz Canel said that his government was analyzing earnings to allow the use of cryptocurrencies in the country, whose gross domestic product fell by 11% in 2020. The country is going through its worst economic crisis in more than 30 years, with inflation reaching 70% last year.

Protesters in Havana.

The shortages plaguing the country prompted thousands of Cubans to protest last July.

Photo: Reuters/Alexnadre Meneghini

If the central bank creates a favorable legal framework for cryptocurrencies, it is because it has already decided that it can bring benefits to the country says Pavel Vidal, a former Cuban central bank economist who teaches at the Pontificia University Javeriana C from Colombia.

The expert, however, doubts that the country is on track to imitate El Salvador, the first country in the world to adopt bitcoin as legal tender last September.

Rather, he sees it as a way for the government to circumvent the effect of US sanctions by facilitating the transfer of international funds.

The trade embargo imposed by the United States for decades cuts Cubans off from international financial markets and conventional payment systems. Thus, Cubans cannot obtain credit or debit cards for international use on the island and find it difficult to do so abroad.

Cryptocurrencies [peuvent] reduce the cost of these international transactions and generate an alternative to transactions in dollars, less sensitive to the sanctions regime believes Pavel Vidal.

According to unofficial figures, around 10,000 Cubans use Bitcoin, making this cryptocurrency one of the most widespread on the island.

Many of them would use it to transfer money to their relatives, something made more complicated since the tightening of American sanctions in 2020.

It is in the wake of these sanctions that the transfer agency Western Union had made the decision to close its 407 offices in service on the island, depriving Cubans of one of the only providers of remittances between the United States and Cuba.

The Central African Republic is following in the footsteps of El Salvador

Meanwhile, the Central African Republic – the second least developed country in the world, according to theUN – ventures firmly into cryptocurrency territory. The country has enacted a law legalizing their use and making Bitcoin an official currency alongside the CFA franc

The purpose of this law is to govern all transactions related to cryptocurrencies in the Central African Republic, without restriction […] carried out by natural or legal persons, public or privateprescribes the text of the law which mentions in particular e-commerce activities, all electronic transactions or even tax contributions. The law also provides that cryptocurrency exchanges are not subject to tax.

The volatility of bitcoin can make you dizzy. In 2021, prices had soared by more than 150% to an all-time high of $68,991, before collapsing by more than 30%.

Even if the market calmed down in 2022, the variations remain very strong: – 17% in February, + 8% in March and + 10% in April. Bitcoin was trading above $39,000 on Wednesday.

President Faustin Archange Touadéra specified that the Central African Republic was becoming the first country in Africa to follow in El Salvador’s footsteps.

The South American country’s decision to adopt bitcoin as its reference currency was quickly condemned by the International Monetary Fund last September. The institution considers this to be a dangerous choice for the financial stability, financial integrity and consumer protection.

This approach places the Central African Republic on the map of the most courageous and visionary countries in the world.believes on the contrary the presidency of the Central African Republic, a country in civil war since 2013.

However, some experts are cautious, seeing it as an attempt to thwart the sanctions imposed on Moscow – President Touadera’s political and military ally – in the wake of his invasion of Ukraine.

The president of Cenfrafrique Faustin Archange Touadéra.

The president of Cenfrafrique Faustin Archange Touadéra during the European Union – African Union summit last February.

Photo: Reuters/JOHN THYS

Already present since 2018, Russian paramilitaries came as reinforcements alongside Central African soldiers at the end of 2020 to repel a rebel offensive.

L’UNfrom NGO international organizations and France, the former colonial power, accuse the government of being in the pay of these mercenaries from the private security company Wagner, regularly denounced for its abuses. One of the group’s members, who acts as the president’s security adviser, is also targeted by European Union sanctions.

The context, with systemic corruption and a Russian partner under international sanctions, raises suspiciontold theAFP Thierry Vircoulon, specialist in Central Africa at the French Institute of International Relations (IFRI). Russia’s search for ways around international financial sanctions calls for cautionhe continued.

Martin Ziguélé, a former Prime Minister now an opposition deputy, announced that the law – adopted by acclamation, according to the presidency – would be challenged before the Constitutional Court by members of the opposition.

With information from Agence France-Presse and Reuters

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