Ugandans have elected not to be left behind by the crypto boom. According to Reuters, Ugandans have received cryptocurrency worth the equivalent of about $4.8 billion between March 2019 and March 2022. That’s about 13% of GDP.
This surge in crypto adoption coupled with the inevitable scams that followed caught the attention of the Ministry of Finance and the central bank. They went ahead to warn of the dangers of crypto in a public statement.
Recently, the central bank took it a notch higher by restricting the ability to buy crypto via mobile money. It warned payment aggregators from transacting with crypto exchanges. This they hope, will throttle its adoption by Ugandans hence reducing exposure to the risks involved.
Our view is a little different. As crypto continues its inevitable rise globally, Ugandans won’t want to miss out on the opportunities it brings. This means that the uptake will continue despite the restrictions. Currently, Banks are still allowed to transact with crypto exchanges and we reckon the majority of investors will shift to them.
It is also still possible to buy cryptocurrencies via exchanges that operate in other countries. The global and decentralized nature of these currencies means that they operate globally without restrictions.
A worry of the Ugandan government as well as others around the world is the use of crypto to facilitate criminal and terrorist activity. The anonymous nature and ease of transfer globally make it a perfect way to transfer money around the world. The crackdown however will push many of its illicit users further underground. Mobile money and bank accounts present a good opportunity for some monitoring and surveillance of the movement of funds to and from crypto exchanges. From the interview we had with Abel Namureba, the country manager of Yellow Card, the crackdown on these mediums will make it much more difficult to monitor and trace funds that are moved through crypto as they will go through multiple nodes abroad before they arrive in the country.
In the end, scams will always exist regardless of the modus operandi. It is up to us to educate ourselves and keep ahead.
A cryptocurrency, crypto-currency, crypto, or coin is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. Cryptocurrencies instead use a decentralized system to record transactions and issue new units. All transactions are verified and recorded on a secure digital ledger called a blockchain.
