Illustration. (Source: techcrunch.com)
The Central African Republic (CAR), the second least developed country in the world according to United Nations (UN) statistics, has accepted Bitcoin is the official currency, along with the CFA franc and legalizes its use electronic money.
The CAR National Assembly voted to approve the decision, and President Faustin Archange Touadéra on April 27 signed into law a law “regulating cryptocurrencies in the Central African Republic”, thereby making the country the first country in the world. in the region where Bitcoin is adopted as a reference currency.
The content of the new law covers the use of cryptocurrencies and those who use them in online commerce, “smart contracts… by blockchain technology” and all electronic transactions. In addition, the new law also stipulates that cryptocurrency exchanges will not be subject to tax.
On September 7, 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender, and the International Monetary Fund (IMF) immediately warned that this was a dangerous decision for investors. with “financial stability, financial integrity and consumer protection”.
Opposition figures at CAR argue that the move just mentioned is only to reduce the use of the CFA franc. The Central African Republic is one of six countries in the Central African region that share the CFA franc – a regional currency backed by France and pegged to the euro. The other five members are Cameroon, Chad, Congo, Gabon and Equatorial Guinea.
The Central African Republic is one of the world’s poorest countries, stuck in a nine-year civil conflict and has an economy heavily dependent on mining, much of which is informal.
Bitcoin is a virtual asset with huge value fluctuations. In 2021, the Bitcoin price surged more than 150% to a record $68,991/Bitcoin, before falling more than 30%. Even if the market settles down in 2022, spreads are strong: -17% in February, +8% in March and +10% in April. On April 27, Bitcoin was trading at more than $39,000.
The large swings in the price of Bitcoin make it risky as a store of value, and the long transaction processing times make this cryptocurrency impractical for valuable transactions. low value.
Critics say anonymous transfers using cryptocurrencies are also a perfect tool for criminals to traffic people and launder money. Meanwhile, Western central banks are concerned about the possibility of cryptocurrencies being used to evade sanctions.
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