‘Desist From Facilitating Trade in Crypto Assets’ Uganda Warns Banks, Fintechs

‘Desist From Facilitating Trade in Crypto Assets’ Uganda Warns Banks, Fintechs

Uganda’s banking authority has issued a warning to payment service providers in the East African country not to allow bitcoin transactions. In a letter, the Bank of Uganda stated that no payment provider or operator, including banks or fintechs, had been permitted to sell or facilitate trade using cryptocurrency, while also referencing the government’s position that cryptocurrency is still not legal cash. Payment providers whose licenses are discovered to be selling or facilitating trade will have their licenses terminated, according to the bank.

“The Bank of Uganda has taken note of news stories and advertisements informing the public that crypto currencies may be converted into mobile money and vice versa. According to this article, the bank’s acting director Andrew Kawere said in a statement that “such conversion cannot happen without the assistance of the Payment Service Providers and the Payment System operators.”

“Please be advised that the Bank of Uganda has not authorised any institution to sell crypto-currencies or assist crypto-currency trading.” This is consistent with the official government position…this is to warn all licensed organizations under the National Payment Systems…not to facilitate crypto currency transactions.” Uganda’s harsh warning comes almost a year after Nigeria ordered financial institutions, including deposit-taking banks, to freeze all accounts dealing in cryptocurrencies and running cryptocurrency exchanges.

Meanwhile, even as some countries continue to hinder cryptocurrency usage, it is exploding in Africa, which has the highest adoption rate in the world. After the country’s parliament overwhelmingly enacted a statute controlling the use of cryptocurrencies, bitcoin became legal money in Central Africa Republic (CAR) just one week ago. 

The CAR, which has a population of 5.4 million people and is one of the poorest countries in the world while being rich in natural resources such as diamonds and gold, became only the second country in the world to legalize bitcoin after El Salvador. Surprisingly, just 10% of the population of the CAR has access to the internet.

The Ugandan government has taken note of the rise in the use, storage, and trading of crypto-currencies in Uganda. Cryptocurrencies are digital assets meant to facilitate electronic payments without the involvement of a central authority or intermediary, such as a central bank or a regulated financial institution. Crypto-currencies can thus be used to make anonymous electronic payments, or they can be acquired and stored for speculative purposes in the hope that their value will grow in the future, allowing them to be sold for a profit.