The central Bank of Uganda (BoU) has recently come out to caution the masses against using cryptocurrencies to transact businesses. The Central Bank says that it has not licensed any firm to offer the services. Cryptocurrencies are any form of currency that exists digitally or virtually and uses cryptography to secure transactions.
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BoU’s statement comes at a time when some companies and individuals are exchanging cryptocurrencies for mobile money and vice versa, the bank says it is illegal. Now that all mobile money companies are regulated by BoU, it makes it easy for them to regulate any services used around mobile money.
Most cryptocurrencies such as Bitcoin and Ethereum are not protected by any assets or government guarantees, therefore holders of these cryptocurrencies are fully exposed to the risk according to the government.
According to the Daily Monitor, Mr. Andrew Kawere, the director of the national payments system, in a notice dated April 29 said that the “Bank of Uganda has noted press reports and adverts advising the public that they can covert cryptocurrencies into mobile money and vice versa. We are also aware that such a conversion cannot happen without the participation of the payment service providers and or payment system operators. This is to advise that the Bank of Uganda has not licensed any institution to sell cryptocurrencies or to facilitate the trade-in of crypto-currencies. This is in line with the official government position as communicated by the Ministry of Finance, Planning and Economic Development in October 2019,”
The note further warned that all licensed entities under the National Payment Systems Act, 2020 should desist from making any cryptocurrency transactions. Once any company is found in breach of the above directive, the Central Bank is mandated to invoke its powers under Section 13(l) (b) & (f) of the NPS Act, 2020.
The government has previously come out to warn cryptocurrency companies in transacting businesses. The government of Uganda does not recognize cryptocurrency as the legal tender in Uganda and has not licensed any organization in Uganda to sell cryptocurrencies or to facilitate trade in cryptocurrencies. Unlike other owners of financial assets who are protected by government regulation, holders of cryptocurrencies in Uganda do not enjoy any consumer protection.
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