BOU Warns Against the Use of Cryptocurrencies & Facilitation of Transactions - Newslibre

BOU Warns Against the Use of Cryptocurrencies & Facilitation of Transactions

The Bank of Uganda (BOU) has taken a serious stance against cryptocurrencies warning members of the public that it hasn’t issued any licences allowing the sale or facilitation of trade in crypto-currencies.

BOU warned all payments intermediaries including banks and fintech companies against facilitating cryptocurrency transactions, saying it has not licensed any institution in the East African nation to carry out such trades.

A statement released by Andrew Kawere, the acting director of the National Payments System on 29 April 2022, read: “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.”

With the cryptocurrency boom taking the world on a spin, many have taken interest in the digital currencies arena with some making small to large investments in order to earn a living and make money while others are using them as a means to carry out transitions across the globe.

However, the government of Uganda hasn’t been very welcoming of cryptocurrencies with many financial institutions within the country still unable to accept any transactions or trading practices in such currencies which isn’t the case for some of its neighbouring countries like Kenya, Tanzania and other African nations like Nigeria to mention but a few that have slowly began to embrace crypto.

BOU decided to make its stance clear today following recent press adverts advising investors that they can convert cryptocurrency into mobile money or vice versa. However, according to the central bank, such transactions can not happen without the participation of service providers and system operators, which is illegal.

Aside from that, Uganda’s payments law allows for the revocation or suspension of licenses for entities that fail to adhere to central bank directives, or those participating in activities likely to endanger the stability of the country’s financial system. Basically, financial institutions that decide to engage in cryptocurrencies could lose their licenses.

Bank of Uganda (BoU) Bans the Use of Cryptocurrency

Given the high unemployment rate in Uganda, it is no surprise that cryptocurrency has gained popularity in the country more so within urban areas. Ugandans have taken the liberty to seek other sources of income which is why some have invested in cryptocurrencies in a bid to make money.

However, despite their popularity, some Ugandans have faced it rough as they have been robbed of their money and savings after being conned by illegal investors or parties claiming high returns on crypto investments. Many have been taken advantage of due to limited knowledge about cryptocurrencies and also due to the limited reach by responsible institutions to take action.

BOU Warns Against the Use of Cryptocurrencies & Facilitation of Transactions - Newslibre
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In the April, 29, notice, BoU notes there are several media reports and adverts telling the public that they can covert cryptocurrencies into mobile money and vice versa which the Central Bank says is not true.

“We are also aware that such a conversion cannot happen without the participation of the Payment Service Providers or Payment System Operators,” BoU said. “Bank of Uganda shall not hesitate to invoke its powers under Section 13(1)(b)and (f) of the NPS Act 2020 for any licences that will be found in breach of the above directive.”

The Ugandan government has made its position clear on cryptocurrencies referring members to a 2019 circular released by the Ministry of Finance which clearly stated that despite the emergence of the practice of using, holding, and trading in cryptocurrencies in the country, the holders bear the risk since the same is not issued or regulated by any government or central bank in any part of the world.”

“This is to inform the general public that the government of Uganda does not recognize any cryptocurrency as legal tender in Uganda. The government of Uganda has also 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 2019 circular reads in part.

The Ministry of Finance said that as such, 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.

 

Interesting read: Explained: What is Blockchain and Cryptocurrency

BOU Warns Against the Use of Cryptocurrencies & Facilitation of Transactions 1

Author: Allan Bangirana

Allan Bangirana has a taste for all kinds of topics and usually writes about tech, entertainment, sports and community projects that make a difference in society.

He writes for Newslibre and Spur Magazine. He is also the co-founder of the Innovware project and a freelance consultant passionate about technology and web.

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