Exploring the implications of cryptocurrencies in selected developing countries
Central African Republic
There is great controversy about how developing countries should approach cryptocurrency regulation. China and certain countries in the Middle East have passed strict regulations banning decentralized virtual currencies due to worries about fraud and religious reasons. In contrast, in September 2021 and April 2022, respectively, El Salvador and the Central African Republic (CAR) have been placed under international scrutiny for their decisions to make Bitcoin legal tender. A shared motivation behind both decisions includes boosting economic growth through increased foreign investment and tourism and decreased dependence on traditional central banks. However, Bitcoin volatility raises concern about its ability to perform as a currency and motivate risky financial decisions within vulnerable populations. Additionally, limited internet penetration in El Salvador and the CAR leads to apprehension about exasperated socioeconomic inequalities that will emerge under a decentralized financial system. The future of crypto in the developing world is a complex and dynamic topic that can set the stage for how individuals, organizations, and governments make critical financial decisions in the coming years.