Central African banking regulator tells notice on ban on use of cryptocurrencies

Central African banking regulator tells notice on ban on use of cryptocurrencies

N'DJAMENA Reuters -- Central Africa's regional banking regulator sent out a reminder on Friday about its ban on the use of cryptocurrencies, weeks after the Central African Republic, a member state, made it legal tender.

The Banking Commission of Central Africa COBAC, which regulates the banking sector in the six-nation Central African CEMAC zone, said the prohibition was meant to ensure financial stability.

The collapse of TerraUSD, a so-called stable coin, rippled through markets as cryptocurrencies nursed large losses on Friday.

The Central African Republic's presidency announced on April 27 that it had been made legal tender, making it only the second country in the world to do so after El Salvador.

The move in one of the poorest nations in the world where internet use is low, conflict is widespread and electricity is unreliable said analysts and criptophonists were puzzled by the move.

The government hasn't provided any details about its reasoning and could not be reached for comment on Friday.

The banking commission held a special meeting on May 6 to examine the impact of cryptocurrencies in the zone, it said in a statement issued on Friday.

In order to ensure financial stability and preserve client deposits, COBAC recalled certain prohibitions on the use of cripto-assets in CEMAC.

It said that they include the holding of cryptocurrencies of any kind, the exchange, conversion or settlement of transactions relating to cryptocurrencies and a bar on them being used as a means of evaluating assets or liabilities.

COBAC has taken a number of measures to set up a system for reporting operations related to cryptocurrencies.