Uganda Warns Fintech Firms Against Allowing Crypto Transactions

Bank of Uganda, the central bank of the Republic of Uganda, has warned intermediaries against facilitating cryptocurrency transactions. It warned all licensees under the National Payments Systems Act to refrain from facilitating cryptocurrency transactions in the country.

On April 29, 2022, the central bank stated they have not licensed any institution to sell cryptocurrencies or to facilitate any trade in cryptocurrencies.

This was expressed in a statement issued by the bank following press adverts advising the public that they can convert cryptocurrencies into money and vice versa.

The statement also read:

We are also aware that such a conversion cannot happen without the participation of the Payment Service Providers and or Payment System Operators.

The central bank also added that it will not hesitate to invoke its powers under Section 13(1)(b) & (I) of the NPS Act, 2020 for any licensees that will be found in breach of the above directive.

This statement comes at a time when the Central African Republic adopted bitcoin as legal tender. It is the second country in the world to take this decision after El Salvador. President Faustin-Archange Touadéra had said: “This move places the Central African Republic on the map of the world’s boldest and most visionary countries.”

However, much of the country did not react with the same enthusiasm. With the country being entangled in a civil war and economic volatility, the opposition has lashed out against the president claiming there were ulterior motives for the decision. It is also interesting to note that when El Salvador made Bitcoin a legal tender, the IMF heavily criticized this decision. Unsurprisingly, regulators across the world are expressing their concerns over the adoption of cryptocurrency by governments.