The Central African States and Cryptocurrency

The Central African States Cryptocurrency Laws

Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology

Within the Central African states, the use of digital currency systems is on the rise.[1] Despite this upward trend, the regulatory framework to support these transactions is not yet fully developed.

Bank of the Central African States

The Economic and Monetary Community of Central Africa includes Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of the Congo (Congo) [CEMAC].[2] The Bank of the Central African States (BEAC) serves the CEMAC member-states.[3] The purpose of the BEAC is to manage the monetary policy, issue currency, manage the foreign reserves of the member states, and facilitate payments and settlement systems.[4]

With respect to cryptocurrency, the BEAC has not articulated a specific policy. However, according to a 2018 report by Ecobank, the central bank created a legal framework for electronic money in 2011.

In 2001, the BEAC issued Regulation No. 01/11-CEMAC/UMAC/CM, commonly known as the Electronic Money Policy, which established a framework for the exercise of the activity of issuing electronic money by certain institutions.[5] In doing so, the policy created conditions for exercising this sort of activity, instituted a regime for the issuance and conversion of electronic money, and provided the modalities of regulation to control and monitor this issuance.[6] Under this regulation, the issuance of electronic money is subject to the authorization of the BEAC.[7]The Regulation creates a mechanism to file for authorization to issue electronic money.[8]

Under Article 20, the BEAC and the Central African Banking Commission (COBAC) ensure the regulation, control, and supervision of the activity related to electronic money issuance.[9] Specifically, BEAC is designated with the power to (1) establish the legal standards surrounding issuance and (2) set the technical standards necessary to guarantee the security, efficiency, and credibility of electronic money.[10] On the other hand, COBAC is tasked with (1) establishing prudential standards for institutions to comply with respect to the liquidity of funds and the issuance of electronic money; (2) countering money laundering and the financing of terrorism via electronic money; (3) accounting for the traceability of electronic funds; and more.[11] Together, BEAC and COBAC have enforcement power to ensure compliance with the existing standards.[12]

Amidst the COVID-19 Pandemic, the BEAC urged citizens of CEMAC to use digital currencies instead of physical cash to further social distancing efforts and to stop the spread of COVID-19.[13]

Cameroon

Currently, Cameroon lacks appropriate regulation addressing cryptocurrency and its legal status. In fact, according to a 2018 study, Cameroon has not yet enacted any legislation regarding cryptocurrencies. Accordingly, no regulatory framework for the use and trade of cryptocurrency exists.

Despite this, Cameroon has taken some strides towards the incorporation of digital money systems. For example, in 2015, the Government of Cameroon contracted with an Indian software company, Trestor, to trial a digital currency, Trest. The results of this bitcoin-like currency were positive, but the high cost associated with the electricity usage necessary to process a cryptocurrency transaction hindered further testing of the currency within Cameroon. Overall, however, this partnership demonstrated a willingness to explore digital currency options within the country.

Although cryptocurrency remains largely decentralized and deregulated by the Cameroonian Government, cryptocurrency has been embraced by separatist movements.[14] In 2018, separatists in Southern Cameroon, seeking international recognition for the Federal Republic of Ambazonia, established AmbaCoin, a separatist-backed cryptocurrency.[15] According to a Quartz report, a group of anonymous Anglophone separatist scholars, technocrats, and developers established AmbaCoin.[16] Reportedly, the group is seeking to tie AmbaCoin to a traditional fiat currency that would allow the region to stop relying on the Central African franc (CFA).[17] Separatists argued that the use of cryptocurrency is vital for secession as it would allow a flow of foreign direct investment absent the control of the central Cameroonian government.[18]

The central African Republic

According to a 2018 study by Ecobank, the Government of the Central African Republic have not articulated a public stance with respect to the use of cryptocurrency and their legality.[19] Beyond the Government of the Central African Republic, the BEAC has not articulated a specific policy with respect to cryptocurrency.[20]

Congo

According to a 2018 study by Ecobank, neither the Government or Central Bank of the Congo have not articulated a public stance with respect to the use of cryptocurrency and their legality.[21] Beyond the Government of the Congo, the BEAC has not articulated a specific policy with respect to cryptocurrency.[22]

Is cryptocurrency legal in the Central African States?

Do you have questions about cryptocurrency, digital currencies, or blockchain technology? Freeman Law can help with digital currencies, tax planning, and tax compliance.   Contact us now or Schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.

 

[1] https://www.lexafrica.com/2019/12/a-law-for-fintech-companies-within-the-cemac-zone/

[2] https://www.imf.org/external/pubs/ft/fandd/2006/12/country.htm

[3] https://www.investopedia.com/terms/b/bank-of-central-african-states.asp

[4] https://www.investopedia.com/terms/b/bank-of-central-african-states.asp

[5] Article 2, No. 01-11-CEMAC/UMAC/CM, https://dfsobservatory.com/sites/default/files/CEMAC%20-%20Regulation%20No.%2001-11-CEMAC-UMAC-CM%20-%20On%20the%20Use%20of%20Electronic%20Money.pdf.

[6] Id.

[7] Id. At Article 4.

[8] Id. at Article 5.

[9] Id. at Article 20.

[10] Id. At Article 21.

[11] Id. At Article 23.

[12] Id. At Articles 28–29.

[13] https://www.mobileworldlive.com/money/news-money/central-african-bank-calls-for-more-digital-payments

[14] https://qz.com/africa/1492745/cameroon-anglophone-separtists-create-cryptocurrency-ambacoin/

[15] https://qz.com/africa/1492745/cameroon-anglophone-separtists-create-cryptocurrency-ambacoin/

[16] https://qz.com/africa/1492745/cameroon-anglophone-separtists-create-cryptocurrency-ambacoin/

[17] https://qz.com/africa/1492745/cameroon-anglophone-separtists-create-cryptocurrency-ambacoin/

[18] https://qz.com/africa/1492745/cameroon-anglophone-separtists-create-cryptocurrency-ambacoin/

[19] https://cdn.crowdfundinsider.com/wp-content/uploads/2018/08/Middle-Africa-Briefing-EcoBank-Note-Digital-African-crypto-regulation-August-2018.pdf

[20] https://cdn.crowdfundinsider.com/wp-content/uploads/2018/08/Middle-Africa-Briefing-EcoBank-Note-Digital-African-crypto-regulation-August-2018.pdf

[21] https://cdn.crowdfundinsider.com/wp-content/uploads/2018/08/Middle-Africa-Briefing-EcoBank-Note-Digital-African-crypto-regulation-August-2018.pdf

[22] https://cdn.crowdfundinsider.com/wp-content/uploads/2018/08/Middle-Africa-Briefing-EcoBank-Note-Digital-African-crypto-regulation-August-2018.pdf