Central African Republic’s ‘Crypto Island’ scheme sparks skepticism

Two months after adopting bitcoin as its official currency, the Central African Republic (CAR) has officially launched the Sango Coin, a controversial cryptocurrency, and announced plans to launch the first tax-free crypto-hub in Africa.

“The Sango will be the next generation currency of the Central African Republic,” President Faustin-Archange Touadéra said during a virtual government event on July 3.

It’s unclear how Sango Coin will operate alongside the country’s official adoption of bitcoin, which was announced in May, a move that has drawn widespread skepticism from experts given that internet adoption in the country – one of the poorest in the world – is only about ten%.

But according to Touadera, Sango Coin will enable the country to tap into its untapped natural resources by facilitating investments through decentralized platforms and avoiding the restrictions of the international financial system. He also claimed that cryptocurrency will help overcome structural issues that impede access to basic financial services. The president said that 52% of his population does not have access to a bank account.

“The smartphone is the alternative to traditional banking, monetary and financial bureaucracy,” he said.

“Crypto Island”

Touadera says the new tax-free crypto hub will be “the catalyst for the tokenization of vast natural resources,” attracting crypto-rich investors from around the world to invest in CAR’s untapped minerals.

The project will also involve the launch of “Crypto Island”. It is a metaverse platform where virtual palaces, casinos, a large stadium and a water park will be built, backed by real estate in Bangui, capital of the CAR.

Earlier this year, CAR became the first African country to adopt bitcoin as legal tender, and the second in the world after El Salvador, sparking concern among international institutions.

The IMF said CAR’s adoption of bitcoin as its official currency “raises significant legal, transparency and economic policy challenges.”

The Bank of Central African States (BEAC), whose role is to implement monetary policies in the six-member Central African Economic and Monetary Community, said CAR’s decision on the crypto -currency is a threat to the stability of its common currency and has banned its use. within the block.

But Touadaré believes Sango – named after CAR’s official language – is an opportunity to free the country from the restrictive rules of financial institutions and harness the potential of the informal economy.

“The cash alternative is cryptocurrency. For us, a formal economy is no longer an option,” he said.

CAR residents ‘won’t see much improvement’

However, experts fear that the CAR bitcoin craze could be a smokescreen for questionable economic activities. BEAC has expressed concern that cryptocurrencies could facilitate money laundering by criminals.

Building a “crypto island,” says freelance tech journalist David Gerard, risks looking like “special economic zones, where the wealthiest people make the laws.”

“If this program continues, outsiders will take control of the resources, earn all the money, and the people of CAR won’t see much improvement except for those at the top,” says Gerard .

“Technology is not involved. Everything revolves around the financial instrument and trade agreements. It’s about people and cash flow. Technology doesn’t do magic and certainly doesn’t move money any differently,” he says.

Some have speculated that close Russian interests in the CAR — which include the government-sanctioned deployment of the Wagner military contractor group — could be served by the adoption of cryptocurrencies.

“Russia has tried a lot to expand its influence in Africa and wants African countries to support its stance on Ukraine and it would pay people to do that,” Gerard said.