World Bank Shows Concern Over Central African Republic Adoption of Bitcoin as Legal Tender

The World Bank has shown concern over the Central African Republic adopting Bitcoin as its legal tender. It also said “it will be physically impossible” for the lender to fund the planned Sango crypto hub.

Media had earlier reported that CAR president, Faustin-Archange Touadéra announced that the country is set to launch its first major cryptocurrency hub ”Sango” to provide digital currency infrastructure.

According to a document detailing the Sango project, the objectives of the hub are “building directly in the heart of Africa the first legal crypto hub, recognized by a country’s parliament that welcomes businesses and attracts global crypto enthusiasts”.

It also stated that “The Central Africa Republic received approval for a $35 million development fund from The World Bank for the digitization of the public sector. The World Bank is not part of the crypto initiative.”

However, a spokesperson for the World Bank told Bloomberg via email that the recently approved grant “is unrelated to any cryptocurrency initiative” and that “the World Bank is not supporting ‘Sango – The First Crypto Initiative Project’.”

It also added that the $35 million grant issued to CAR from the World Bank was meant for updating and digitizing the existing public financial management system such as improving digital bank payments.

Expressing its disapproval of the adoption of Bitcoin as legal tender by the country, the World Bank added that “it will be physically impossible” for the institution to fund the Sango project “We have concerns regarding transparency as well as the potential implications for financial inclusion, the financial sector and public finance at large, in addition to environmental shortcomings.”

“It is important that the relevant regional institutions, such as the central bank and the banking authorities, are fully consulted and remain in the driver’s seat.”

The governor of the Bank of Central African States, or Banque des États de l’Afrique Centrale (BEAC), Abbas Mahamat Tolli also issued a letter to the CAR Finance Minister Hervé Ndoba stating that the adaptation of cryptocurrency by the country will have a “substantial negative impact” on the monetary union of Central Africa.

In the letter, Tolli noted that “This law suggests that its main objective is to establish a Central African currency beyond the control of the BEAC that could compete with or displace the legal currency in force in the CEMAC and jeopardize monetary stability.”