After El Salvador, IMF Raises Concerns Over CAR Legalizing Bitcoin

Key Insights:

• The Central African Republic recently adopted Bitcoin (BTC) as a legal currency.
• IMF believes that this decision might cause significant economic challenges.
• The IMF has previously urged El Salvador to reverse its decision to make Bitcoin a legal tender.

El Salvador’s revolutionary decision to make Bitcoin a legal tender was met with a lot of criticism and objections from various government authorities around the world. 

Making crypto a legal currency is still a novel attempt at financial inclusion, which in some ways threatens the traditional financial operations leading to these concerns. 

CAR is now under IMF’s watch

As previously reported, the CAR adopted the Draft Law Governing Cryptocurrency favorably by acclamation and unanimity on April 25.

This made it the first country in the region to legalize cryptocurrencies and second in the world after El Salvador. 

The purpose of creating the bill was to eliminate the control of the Central Bank, as stated by the Minister of Digital Economy Gourna Zacko. 

Now, this did not sit well with many people since the law was passed without the consultation of the regional central bank responsible for handling the issuance of a common currency also used by the CAR.

In line with the same issues, the IMF told Bloomberg:

“The adoption of Bitcoin as legal tender in CAR raises major legal, transparency, and economic policy challenges. IMF staff are assisting the regional and Central African Republic’s authorities in addressing the concerns posed by the new law.”

Not the first time

When El Salvador adopted Bitcoin as legal tender, the IMF did not hold back with its objection and even urged the country to reverse the decision.

The IMF board warned El Salvador President Nayib Bukele about Bitcoin’s risk to the financial stability, financial integrity, and consumer protection to the extent of stalling El Salvador’s request for the $1.3 billion loan from the IMF. 

This is proof that as long as the traditional financial systems do not understand the opportunities and advantages of cryptocurrencies and continue to see them as a threat than an advancement, crypto will not become the future of finance.