While it seemed that the CAR and the regional organization (CEMAC) were on the verge of harmonizing their positions and finding a common solution, recent developments at the national level have called into question the viability and perhaps even the existence of cryptocurrencies in CAR. In fact, five citizens of CAR have filed a petition at the Constitutional Court arguing that the regulation of cryptocurrencies in the country is unconstitutional. On August 29, 2022, this court rendered its decision. The objective of this contribution is to examine these recent developments and discuss their impact on the future of cryptocurrencies in the CAR.
The constitutional petition
On 1 August 2022, five citizens of CAR petitioned the Constitutional Court alleging the unconstitutionality of certain regulatory measures taken to implement Law n°22.004 governing cryptocurrency in the Central African Republic and to promote cryptocurrencies in the CAR. It would be recalled that after the promulgation of this law, the government authorities, led by President Faustin Touadéra, took many measures to implement this law. In this regard, an official website, called sango.org, has been launched. According to documents available on this site, investors could obtain Central African citizenship for the equivalent of 60,000 USD in cryptocurrencies (Sango Coins), held for a minimum of 5 years. With the equivalent of 6,000 USD in Sango Coins, held for a period of 3 years, the investor could obtain an e-residence. It was also possible to acquire land with the equivalent of 10,000 USD in Sango Coins, held for a period of 10 years.
Considering the constitutional implications of these measures, some citizens seized the Constitutional Court with a request to declare acts of the executive organizing the sale of Central African nationality, soil and subsoil within the framework of the execution of the law governing the cryptocurrencies in the CAR as unconstitutional and therefore null and void.
The decision of the Central African constitutional court
In its Decision n° 008/CC/22 of 29 August 2022, the Constitutional Court deemed itself competent to hear the application and declared it admissible insofar as it is effectively a question of the constitutionality of regulatory provisions. The court examined three major issues: the sale of Central African nationality, e-residence and the sale of land and the tokenization of natural resources.
Firstly, with regard to the sale of Central African nationality on the sango.org site, the court began by recalling that the establishment of the rules for the acquisition and loss of nationality is the responsibility of the legislature, in accordance with article 80 of the Central African constitution (CAR constitution). And that the executive branch of government is responsible for applying these laws and, if necessary, supplementing them with regulatory acts. Given that Law No. 22.004 governing cryptocurrency in the Central African Republic does not contain any provision relating to citizenship, the Constitutional Court, in application of the principle of the separation of powers and the aforementioned Article 80 of the CAR Constitution, declared the sale of Central African nationality unconstitutional and repealed the relevant provisions.
Secondly, the court considered that not only is the e-residence not recognized by the Central African legislation but it also does not comply with the CAR constitution, which in its article 80 entrusts to the law “the status of foreigners and the immigration”. The e-residency provisions were therefore declared unconstitutional and struck down.
Thirdly, regarding the sale of land and the tokenization of natural resources on the sango.org site, the court ruled that the sale of land and natural resources, as provided for on the site, is contrary to the constitutional provisions, in particular articles 80 and 60 of the CAR constitution and the respect for the principle of territorial integrity.
Finally, the Court declared the exclusive use of the English language both on the sango.org site and for the official document “Sango Genesis Paper” Unconstitutional. Such use de facto excludes the majority of Central Africans who do not understand English and contravenes article 24 of the CAR Constitution which confers the status of official language of the Central African Republic on Sango and French.
Implications of the constitutional decision
The decisions of the Constitutional Court are final and binding on all authorities (whether public, administrative and juridical) and on any natural or legal person, in accordance with article 106 of the CAR Constitution. Moreover, any text declared unconstitutional is null and void and is of no legal effect. If it is in force, it is withdrawn from the legal order.
In the present case, it is not Law No. 22.004 which has been declared unconstitutional but rather the measures adopted by the executive bodies to implement this law. Nevertheless, the Central African government has decided to review its entire cryptocurrency strategy and, by decree n°198 of 11 October 2022, has set up a commission responsible for drafting a new bill relating to the use of cryptocurrencies and tokenization in the Central African Republic. This committee was composed of 15 experts from several ministries, namely the Ministry of Mines and Geology; the Ministry of Water, Forests, Hunting and Fishing; the Ministry of Agriculture and Rural Development; the Ministry of Urban Planning, Town Land Reform and Housing; and the Ministry of Justice, Promotion of Human Rights and Good Governance.
After months of work, a new law was proposed to Parliament which was passed unanimously on 23 March 2023. Although the text of the new law is not yet publicly available, press releases indicate that in the new law, bitcoin is no longer considered legal tender but rather a benchmark cryptocurrency (see here and here). Also, the “obligation” to accept crypto-currencies as a means of payment, which appeared in article 10 of law n°22.004, has been replaced by a “freedom” to accept or not accept crypto-currencies as a means of payment when they are offered for the purchase or sale of goods or services.
All in all, the Central African authorities want to be optimistic about the future of cryptocurrencies in the CAR and their ability to contribute to the development of this country. This optimism is perhaps fuelled by some recent developments at the regional level such as the adoption of Regulation No. 01/22/CEMAC/UMAC/COSUMAF on 21 July 2022 and the ongoing discussions initiated by BEAC to develop a legal and regulatory framework for activities relating to the issuance and management of crypto-currencies (see the Final Communique of the 15th Ordinary Session of the Conferences of Heads of State of CEMAC). It remains to be seen if these clouds which are piling up in the Central African sky are harbingers of good weather and not of thunderstorms.