The World Bank said the lender was “physically unable” to fund the proposed Sango crypto hub, raising concerns about the country’s adoption of Bitcoin.
The World Bank has expressed concern over Central African Republic (ZAR) accepting Bitcoin (BTC) as its legal currency, saying it will not support the recently announced “Sango” crypto hub.
In late April, CAR President Faustin-Archange Touadéra created a regulatory framework for cryptocurrencies in the country and introduced bitcoin as legal tender. On May 24, he announced a plan to launch the country’s first crypto hub called “Sango.”
Sango is described as the country’s first “crypto initiative” — a legal hub for crypto-related businesses that will cover economic policy, including no corporate or income tax and the creation of a virtual and physical “crypto island.”
A white paper outlining the Sango project says the country “has received approval from the World Bank for a $35 million development fund to digitize the public sector.”
However, a spokesman for the institution told Bloomberg via email that the newly approved grant “is not affiliated with any cryptocurrency initiative” and that “the World Bank does not support ‘Sango – the first cryptocurrency initiative project’.”
The World Bank’s $35 million grant, announced on May 5, was intended to upgrade and digitize the existing public finance management system, such as by enhancing digital bank payments.
In a statement, the World Bank added that it was “physically impossible for the organization” to fund the Sango project and expressed its disapproval of the CARs’ adoption of Bitcoin:
“We have concerns about transparency as well as possible implications for financial inclusion, the financial sector and public finances in general, in addition to the environmental disadvantages.”
The introduction of Bitcoin in CAR also drew the ire of Bank of Central African States (BEAC) Governor Abbas Mahamat Tolly, who wrote a scathing letter to CAR Finance Minister Herve Ndobe shortly after news of the introduction , wrote.
In the letter, Tolley wrote that the new law “suggests that its primary purpose is to create a Central African currency outside of BEAC’s control that could compete with or supplant the legitimate currency,” which he says “endangers the currency.” would stability.”
The World Bank echoed this sentiment, stating:
“It is important that the responsible regional institutions such as the central bank and banking supervision are given comprehensive advice and remain in charge.”
On the topic: “We don’t like our money”: The story of CFA and Bitcoin in Africa
There is growing hostility in the country towards the CFA franc, the CAR’s official fiat currency, which is pegged to the euro. Meanwhile, according to crypto exchange KuCoin’s March report, the adoption rate of crypto in Africa has surged, showing that crypto transactions have grown by more than 2500% in 2021.
It is not clear what the adoption rate of cryptocurrencies is in Central African Republic in particular. According to DataReportal data from January 2022, the country has an internet penetration rate of just over 7% of the total population, which means that only about 350,000 people are online at all.