Bank of Uganda has revealed that it has not licensed any institution to sell or to facilitate the trade in crypto-currencies in Uganda.
Crypto-currencies are digital assets that are designed to effect electronic payments without the participation of a central authority or intermediary such as a Central Bank or licensed financial institution. Crypto-currencies may therefore be used to effect anonymous electronic payments or bought and held for speculative purposes in the expectation that their value will rise at a future time, whereupon they could be sold for a profit.
In a statement, the banking industry regulator noted that it has learnt of press reports and adverts advising the public that they can covert crypto currencies 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,” said Andrew Kawere, Acting Director national payment systems.
“This is to advise that Bank of Uganda has not licensed any institution to sell crypto currencies or to facilitate the trade in crypto-currencies.”
Mr. Kawere added, “Accordingly, this is to warn all licensed entities under the National Payment Systems Act, 2020 to desist from facilitating crypto currency transactions. Bank of Uganda shall not hesitate to invoke its powers under Section 13(1) (b) & (f) of the NPS Act, 2020 for any licensees that will be found in breach of the above directive.”
In October 2019, the Ministry of Finance, Planning and Economic Development also warned the public of the same.
Stanbic Bank Calls on Graduates to Tap into Skills and Financing OpportunitiesToday, hundreds of crypto-currencies have been designed and launched around the world, but the the ministry revealed that none of them is regulated by the government of Uganda.
“The government of Uganda does not recognize any crypto-currency as legal tender in Uganda.”
“The government of Uganda has not licensed any organization in Uganda to sell crypto-currencies or to facilitate the trade in crypto-currencies and so these organizations are not regulated by the Government or any of its agencies,” the ministry said.
As such, the ministry warned that unlike other owners of financial assets who are protected by Government regulation, holders of crypto-currencies in Uganda do not enjoy any consumer protection should they lose the value assigned to their holdings of crypto-currencies, or should organization facilitating the use, holding or trading of crypto-currencies fail for whatever reason to deliver the services or value they have promised.
The ministry further advised general public of the following risks associated with crypto-currencies including;
- Most crypto-currencies such as Bitcoin and Ethereum are not backed by assets or government guarantees, therefore holders of these crypto-currencies are fully exposed to the risk of loss or diminishing value as the issuers are not obliged to exchange them for legal currency or other value.
- Crypto-currencies tend to change value rapidly over time. While holders of crypto-currencies may make profits when their value rises, they will be exposed to losses when their value falls.
- The nature of crypto-currencies make them attractive for use in criminal transactions such as money laundering, sale of prohibited goods and services, and fraudulent venture such as Ponzi and pyramid schemes.
“In conclusion, the public is advised to appraise themselves of the risks associated with cyber-currencies, and exercise caution before they make transactions involving such products.”
