Bank of Uganda blacklists cryptocurrency dealers

The Bank of Uganda(BOU) has warned all licensed entities under the National Payments Systems Act to desist from facilitating crypto-currency transactions.

“We have noted press reports and adverts advising the public that they can convert cryptocurrencies to mobile cash or the other way round. We also are aware that such a conversion cannot happen without the participation of the Payment Service Providers and or Payment System operations, “said Andrew Kawere, Acting Director, Office of the National Payments System- Bank of Uganda, in a statement and circular to all licensees, dated 29th April 2022.

The Bank of Uganda said it had not licensed any institution to sell crypto-currencies or facilitate the trade in cryptocurrencies. This is in line with the Government of Uganda’s official as was stated in October 2019 by the Uganda Ministry of Finance, Planning and Economic Development.

In this statement, the Ministry noted the emergence of the practice of using, holding and trading crypto-currencies in Uganda.

Bank of Uganda Directives

Bank of Uganda said it shall not hesitate to invoke its powers under Section 13(1)(b) and(f) of the NPS Act 2020 for any licensees that will be found in breach of the above directive.

-currencies are defined as digital assets designed to effect electronic payments without the involvement of any monetary authority such as a Central Bank of licensed financial institution.

Crypto-currencies can be used, therefore, to make settle digital transactions or can be held for purely speculative dealings.
The most well-known cryptocurrencies are Bitcoin and Ethereum. Any government or central bank does not issue such currencies.

Bank of Uganda has warned that it does not recognize cryptocurrencies as legal tender, and thus owners of such financial assets are not protected should their holdings lose value. Also, there is no compensation should holders of such assets fail to deliver what they had promised.

Uganda’s monetary authorities added that cryptocurrencies make it easy for criminals to use such assets for money laundering, sale of prohibited goods and services, and fraudulent ventures such as Ponzi and pyramid schemes.

Assets or government guarantees do not back most crypto-currencies such as bitcoin and Ethereum; therefore, holders of these assets are fully exposed to the risk of loss or diminishing value.

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