After the Central African Republic recognized Bitcoin as legal tender without consulting its monetary authority, the Central African bank is cracking down on Bitcoin transactions.
The Bank of Central African States, which disregards cryptocurrencies, is now prohibiting all banks from cooperating with digital currency payment platforms or recognizing them as assets.
The Banking Commission of Central Africa (COBAC), which oversees the banking sector in the six-nation Economic and Monetary Community of Central Africa (CEMAC), said the restriction was necessary to maintain financial stability.
The Central African Republic’s presidency announced on April 27 that bitcoin had been made a legal tender, making it the second country to do so after El Salvador.
The government of the Central African Republic claims that Bitcoin adoption will assist the country’s economy recovery process, and as well stabilize the country, which has been decimated by a decade-long civil war.
Opposition parties, on the other hand, criticized the administration for making the decision without contacting the regional central bank, which oversees the common currency of six countries, including the Central African Republic.
The International Monetary Fund has also stated that the adoption of Bitcoin as legal tender by the Central African Republic presents a number of challenges.
After accusing the Central African Republic of breaching a decades-old agreement to share a common currency with five of its neighbors when it embraced Bitcoin last month, the regulator is toughening its stance.
The CFA Franc is used in Cameroon, Chad, Equatorial Guinea, Gabon, the Republic of Congo, and the Central African Republic.
According to a statement seen by Reuters on Friday, the banking commission conducted a special meeting on May 6 to evaluate the impact of cryptocurrencies in the zone.
“In order to guarantee financial stability and preserve client deposits, COBAC recalled certain prohibitions related to the use of crypto-assets in CEMAC,” it said.
The holding of cryptocurrencies of any type, the exchange, conversion, or settlement of transactions involving cryptocurrencies, and the use of cryptocurrencies as a way of appraising assets or liabilities are all prohibited, according to the report.
Thus, “COBAC has decided to take a number of measures aimed at setting up a system for identifying and reporting operations related to cryptocurrencies,” it added.