How CAR’s Cryptocurrency Adoption Enabled Elite Influence and Criminal Networks
The Central African Republic (CAR) became the second country to adopt Bitcoin as legal tender in April 2022. Since then, investigative reports have linked this rapid cryptocurrency push to an increase in elite political influence and the infiltration of criminal networks exploiting weak oversight. Understanding these developments is critical as CAR’s crypto policy unfolds amid limited governance frameworks and ongoing institutional challenges.
What happened
In April 2022, CAR officially adopted Bitcoin as a legal currency, following El Salvador’s precedent. This move was intended to promote financial inclusion and attract investment, supported by partnerships with major cryptocurrency firms including Binance and Paxful. These companies have collaborated with the government to develop crypto infrastructure and promote Bitcoin usage within the country.
However, a report by the NGO Global Witness, alongside other investigative bodies, has documented that this rapid adoption coincided with an increase in the influence of elite political actors. According to the report, these elites have leveraged crypto initiatives to consolidate control over the economy and state resources, effectively bypassing traditional financial oversight mechanisms. The report characterizes this phenomenon as a form of “state capture” facilitated by crypto tools.
In parallel, the same investigations reveal that criminal networks, particularly those engaged in illegal mining and arms trafficking, have exploited the absence of robust regulatory controls to channel illicit proceeds through cryptocurrency. These groups reportedly use crypto for money laundering and to finance their operations, taking advantage of the opacity and lack of enforcement in the emerging crypto ecosystem in CAR.
Official disclosures from CAR’s Ministry of Digital Economy confirm that no comprehensive regulatory or oversight framework currently exists to monitor cryptocurrency transactions or prevent misuse. This regulatory gap aligns with assessments from international bodies such as the Financial Action Task Force (FATF) and Transparency International, which highlight CAR’s weak governance structures and limited capacity to enforce anti-money laundering (AML) and counter-terrorist financing (CTF) controls.
Why this matters
CAR’s experience underscores the risks that can accompany rapid cryptocurrency adoption in fragile states with limited institutional capacity. The intersection of political elite consolidation and criminal network infiltration through crypto channels illustrates how digital currencies, absent adequate governance, can amplify existing governance challenges rather than resolve them.
From a policy perspective, CAR’s case highlights the potential for cryptocurrencies to be exploited as tools for “state capture,” where elites entrench their power by circumventing conventional financial oversight. This dynamic raises concerns about transparency, accountability, and the rule of law in countries adopting crypto without parallel development of regulatory frameworks.
Moreover, the infiltration of criminal networks using cryptocurrency for laundering proceeds from illegal activities such as diamond mining and arms trafficking signals a significant threat to regional security and economic integrity. The lack of AML and CTF enforcement mechanisms creates vulnerabilities that can undermine international efforts to combat illicit finance.
At a broader market level, CAR’s situation demonstrates the challenges for international crypto firms partnering with governments in high-risk jurisdictions. The absence of clear disclosures about these firms’ roles in monitoring or preventing misuse complicates assessments of compliance and reputational risk.
What remains unclear
Despite these findings, significant gaps remain in understanding the full scope and impact of CAR’s cryptocurrency adoption. There is no publicly available data quantifying the volume of crypto transactions or the proportion of government revenue influenced by cryptocurrency. This lack of transparency limits the ability to measure economic benefits such as increased remittances or foreign investment attributable to crypto.
Details about any governance or regulatory frameworks currently under development by CAR to address these risks are not disclosed. It is also unclear to what extent international crypto firms involved in CAR have implemented controls to detect or prevent illicit use of their platforms.
Furthermore, the investigative reports rely heavily on anecdotal evidence and indirect indicators rather than systematic quantitative data, making it difficult to establish causality between crypto adoption and the observed political or criminal dynamics. The ongoing conflict and broader institutional weaknesses in CAR complicate isolating the effects of cryptocurrency from other governance challenges.
What to watch next
- Development and announcement of specific regulatory or oversight frameworks by CAR’s government to monitor cryptocurrency transactions and prevent misuse.
- Disclosures or reports from crypto firms such as Binance and Paxful regarding their compliance measures and efforts to mitigate illicit activity in CAR.
- Independent audits or data releases quantifying the scale of cryptocurrency use within CAR’s economy and government revenue streams.
- International bodies’ assessments, such as updated FATF reports, on CAR’s progress in strengthening AML and CTF controls related to cryptocurrency.
- Any observed changes in the involvement of criminal networks in crypto-enabled money laundering or financing activities as governance mechanisms evolve.
CAR’s rapid embrace of Bitcoin as legal tender has coincided with a complex interplay of elite power consolidation and criminal exploitation, facilitated by weak governance and oversight. While the potential economic benefits of crypto remain unquantified, the absence of regulatory frameworks presents clear risks. Monitoring forthcoming regulatory developments and transparency initiatives will be essential to evaluate whether CAR can mitigate these risks while harnessing cryptocurrency’s potential.
Source: https://cointelegraph.com/news/central-african-republic-crypto-state-capture-criminal-networks-report?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.