Bank Of Uganda May Be Softening Its Stance On Crypto

As crypto adoption grows globally, Africa looks set to be the next hotbed for crypto and blockchain development as central banks, financial authorities, regulators, and corporations are now willing to explore the potential in the fast-rising market. For example, a letter has revealed that the Bank of Uganda (BoU) is set to open the doors of its regulatory sandbox to the Blockchain Association of Uganda (BAU).

BoU Invites BAU To Participate In Its Regulatory Sandbox

Last Thursday, a letter dated June 1 shared on Twitter by the Kampala Associated Advocates, a leading law firm in Uganda, revealed that the country’s apex bank had opened its doors to crypto firms for participation in its regulatory sandbox. The letter, which alluded to previous meetings in May between officials from the BoU and the BAU, requested that the BAU work with the central bank to explore the possible applications of the revolutionary technology in its sandbox.

“Reference is made to your letter dated May 5, 2022. Further reference is made to the deliberations held at the meeting between the team from the Blockchain Association of Uganda and officials from the Bank of Uganda held on Wednesday, May 4, 2022. Bank of Uganda welcomes your proposal to share knowledge with our technical teams on the crypto business models and whether some use cases are eligible for testing under the Regulatory Sandbox,” the letter read.

The regulatory sandbox, which launched about a year ago, allows FinTech companies to explore novel payment solutions under the supervision of the BoU. With the sandbox, the BoU hopes to advance the use of digital payment solutions in the country.

Notably, the latest invitation extended to crypto businesses to participate in a regulatory sandbox geared toward developing new digital national payment solutions contradicts the stance of the BoU on crypto so far. As reported by ZyCrypto in May, the central bank had warned licensed payment providers and banks against facilitating crypto payments. 

Factors Driving Crypto Adoption In Africa

Despite the reluctance of certain governments on the continent to explore the nascent market, trading and investing in these digital assets is on the rise. However, it should come as no surprise, considering overarching economic concerns, add to that the fact that the continent boasts of the youngest population globally, with youths more likely to be involved in trading cryptocurrencies than other age groups.

Consequently, the continent has caught the eye of crypto firms and VCs, actively participating in funding rounds for blockchain startups and sponsoring sporting events. Moreover, there have been increased reports of African countries opening their doors to the nascent market in recent months.

While the Central African Republic is now grabbing headlines for being the first on the continent to adopt Bitcoin as legal tender, others are also trying to drive innovation in the blockchain industry. For example, as previously reported, Zambia is working on plans to become a tech and crypto hub with support from groups like the Ethereum Foundation. At the same time, in the West, the Nigerian SEC has created rules for digital asset service providers looking to obtain a license in the country.