Bank Of Uganda Warns Against Crypto

While crypto adoption is increasing considerably around the world, some governments are still skeptical of the budding market. Uganda is one of these nations with the administration deciding to remain on the fence as the central bank decided to release a new warning against the use of cryptocurrencies.

Bank of Uganda insisted that it has not issued any licenses to crypto companies and any other operators. Based on reports published by a local news agency, the Bank of Uganda has already issued a stern warning against cryptos.

In a notice published last Friday, the director of the nation’s national payment system Mr. Andrew Kawere allegedly said that the central bank was not pleased with the promotion of crypto services in the country, terming the services as illegal. Kawere’s official notice reads:

“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 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.”

Kawere, through his notice, went further to advise that all the licensed payment providers that are involved in facilitating crypto transactions to desist from doing that or will face the full wrath of the law. Moreover, the official’s notice read:

“Bank of Uganda shall not hesitate to invoke its powers under Section 13(l) (b) & (f) of the NPS Act, 2020 for any licensees that will be found in breach of the above directive.”

In the meantime, it is not the first time that the authorities have advised the residents to avoid engaging in crypto transactions. In 2019, the nation’s minister of finance, Matia Kasaija, said that cryptos did not hold any legal tender status in the East African nation. He added that the government is yet to approve any digital asset service company.

Kasaija, in a similar statement that features warnings from the other global regulators skeptical of the budding market, informed the investors that these cryptos existed outside the nation’s laws. As a result, the minister insisted that the investors do not have any protection from the government and risked losing all their investments.

Moreover, the Ugandan official expressed worry that the nature of cryptos made them appealing to scammers, fraudsters, and other criminal groups.

Crypto Adoption In Uganda And The Hurdles

Despite the Bank of Uganda’s warnings, the crypto market in Uganda continues to thrive despite regulatory uncertainty. Interestingly, the same is true of their West African counterpart Nigeria whose central bank has already restricted banks from facilitating all crypto payments. However, Nigeria is one of the nations with the biggest Bitcoin trading volume.

While the governments in Nigeria and Uganda remain highly opposed to cryptos, others in Africa are embracing the disruptive technology. For instance, the Central African Republic took a bold step of adopting Bitcoin as a legal tender, while Zambia is currently pushing to become a crypto hub on the continent.

Nevertheless, crypto adoption in the region together with many other developing economies is not free of different challenges. Apart from structural worries. The International Monetary Fund (IMF) also keeps pushing against crypto adoption with the latest warnings to the Central African Republic on its Bitcoin adoption.

The pressure from the international lender might readily be cited as one of the motivations for Argentina’s latest move to restrict the banks from facilitating crypto transactions.