In the spring of 2022, the Central African Republic (CAR) became the first African country to adopt Bitcoin (BTC) as a legal tender.
As the second country globally to recognize Bitcoin in such a fashion, the CAR followed in El Salvador’s footsteps. El Salvador has since boasted surging tourism numbers, a resilient economy and a healthy amount of free PR since allowing its citizens to make everyday purchases with the seminal cryptocurrency.
The CAR, a substantially less economically developed economy than its Central American counterpart, would hope to emulate El Salvador’s success. Despite the nation’s vast natural resource wealth, the CAR is plagued by economic mismanagement, meager private and foreign investment, and systemic governmental issues.
It is one of the poorest countries on the poorest continent in the world, ranking right at the bottom of the World Bank’s Human Development Index. To make matters worse, up to 85% of the country’s exports are kept in French treasuries, while its currency of choice, the CFA franc, is heavily biased toward economic development in France. Consequently, tapping into a neutral, open-source and censorship-resistant monetary system such as Bitcoin could not only benefit but emancipate the country.
President Bitcoiners
Similar to El Salvador, the CAR law would make Bitcoin “official money.” Naturally, this decision was lauded by Bitcoin advocates the world over. Plus, it appeared that CAR President Faustin-Archange Touadéra, a mathematician and Bitcoin supporter on social media, was inclined to support the adoption of the unique cryptocurrency. The pro-Bitcoin tweets smack of El Salvador’s laser-eyed president, Nayib Bukele.
Mathematics is the #language of the Universe.#Bitcoin is universal money.
— Faustin-Archange Touadéra (@FA_Touadera) April 27, 2022
However, celebration and support for the country among the Bitcoin community were short-lived as, despite formal visits by Bitcoin-only proponents — including Galoy Money — the country began its own token project. Just days after the Bitcoin law came into effect, the country surprised the crypto community by announcing the creation of a crypto token called Sango. The population of 5 million would also benefit from a “crypto hub” in the capital, Bangui.
Cointelegraph sat down in Senegal, West Africa with Mamadou Moustapha Ly, the Central African technician who oversaw the development of Sango Coin, to ask about the project’s development. A payments expert, Ly also runs the fintech startup Kete Cash. Ly shed light on the creation of what he called a “token, not a currency,” labeled Sango. Sango is the token that would accompany the country’s plans to adopt Bitcoin as a legal tender.
First, Ly stressed that the Bitcoin-as-legal-tender law clearly states that the country will adopt Bitcoin. There is no mention of other cryptocurrencies or even Sango Coin. He painted a clear divide between Sango and Bitcoin:
“The law states that the digital currency that is legal tender is Bitcoin. We recognize this as our official currency. […] Sango coin is a project for the Central African Republic state.”
Sango Coin offers attractive incentives to foreign investors, including citizenship by investment and eventually a CAR passport, as well as governance advantages. In a sense, buying Sango is a way of buying residency in the country, without touching government-issued fiat currencies.
A token effort
But why was this necessary? El Salvador did not create a new token to support its Bitcoin adoption efforts — so, why would the CAR?
To compare the two country’s Bitcoin adoption strategies, both countries announced Bitcoin as a legal tender. From that point onward, they diverge. In El Salvador, foreigners could initially buy residency with an investment of 3 BTC, although it was then rescinded. In the CAR, “e-residency can be obtained […] by locking a fixed collateral of SANGO Coins in the amount of 6000$ for a period of 3 years.” Plus, foreign investors can directly access the country’s strategic resources through the use of the crypto token, Ly explained.
To gain exposure to El Salvador’s rapid development without touching Bitcoin, the Central American country teed up volcano bonds. The volcano or Bitcoin bonds support the creation of a “Bitcoin City” and are backstopped by the government. In contrast, Sango is a cryptocurrency built on a blockchain “backed by Bitcoin.”
The now-defunct Luna Classic (LUNC) token was the last time a token used Bitcoin as its treasury. The token’s meltdown wiped billions of dollars from the crypto total market cap and dented confidence in the industry. So, why create a token? Why build a system liable to hacking or attack from malicious actors? And why do so despite the Bitcoin contingent’s best interest to steer…
cointelegraph.com