Financial Crime World

IMF Report Raises Concerns Over Central African Republic’s Proposed Cryptocurrency Project, Sango

The International Monetary Fund (IMF) has released a report highlighting several concerns and ambiguities surrounding the proposed cryptocurrency project, Sango, in the Central African Republic (CAR). The report questions the design of the Sango coin and its classification as a digital currency.

Key Concerns and Ambiguities

  • Unclear Classification: The Sango coin’s blend of private and public digital money features makes it difficult to classify.
  • Not a CBDC: It does not meet the standard definition of a Central Bank Digital Currency (CBDC) since it is not a digital liability of the central bank.
  • Not a Stablecoin: Despite being backed by Bitcoin, Sango coin’s high volatility means it cannot be considered a stablecoin.

FATF Classification and Complexity

  • The Sango coin falls under the Financial Action Task Force (FATF) definition of virtual assets due to its digital nature.
  • Its design combines features from non-fungible tokens (NFTs), utility tokens, security tokens, and governance tokens in an untested way with significant ambiguities.
  • Unclear Issuance: It is unclear whether the Sango Coin is issued by the State or another entity.
  • Fiscal Risks: There are potential fiscal risks if the Sango Coin does not have an explicit guarantee from the State, and future revenue streams on natural resources are not properly considered in the Sango coin issuance.

Valuation Uncertainty

The report notes that the high volatility of the Sango coin and its potential for de-pegging from Bitcoin create uncertainty regarding its valuation.