• The Central Bank of Uganda (BoU) warns against crypto transactions
• Crypto asset owners are left unprotected with no regulations to control local crypto industries
• Bank of Uganda warns against crypto transactions to curb crimes related to cryptocurrencies

The Bank of Uganda issued a warning to its public against businesses that are transacting through cryptocurrencies. The bank notified the public that it had issued no licenses to allow any company to offer crypto services.

The top bank in Uganda reminded payment providers that it has not changed its stand on cryptocurrencies since 2019. The bank had initially issued a warning to financial services providers against facilitating cryptocurrency trades. 

On 29th April 2022, the director of the National Payment System, Mr Andrew Kawere, stated that the Bank of Uganda noted some organizations were advertising conversions of cryptocurrency to mobile money and vice versa, which the bank terms are illegal.

“Bank of Uganda has noted press reports and adverts advising the public that they can convert cryptocurrencies into mobile money and vice versa. We know also that such a conversion cannot happen without the participation of the payment service providers and or payment system operators.” Bank of Uganda reports.

The bank stated any bank found breaching the directive would be subjected to the powers under the Ugandan laws.

Why is Uganda Against Cryptocurrencies?

Just like most African central banks, the Bank of Uganda does not perceive cryptocurrencies as a legal tender.

Back in 2019, the Ugandan government, together with the Bank of Uganda, warned its citizens that cryptocurrencies are not upheld as assets and that the government does not offer any guarantees. 

This leaves the owners of crypto assets unprotected in case the value of their assets deteriorates. They will not receive any compensation in case the holders of the assets cannot deliver their promises.

Most Central Banks, including the Bank of Uganda, believe that cryptocurrencies are easily manipulated.

The bank noted cryptocurrencies are used to facilitate several crimes such as money laundering, swindling ventures such as Pyramid and Ponzi schemes and purchasing and selling of barred services.

African Central Banks Have Alternatives for Cryptocurrencies

In Africa alone, eight countries have launched the Central Bank digital currencies (CBDC) as alternatives for cryptocurrency. Countries such as Nigeria, Morocco, Rwanda and Kenya, among others, are considering CBDCs.

The Central Banks claim the CBDCs are more efficient when it comes to cost than the physical cash and have lower transaction costs.

This form of digital currency provides transparency standards and helps limit illicit activities. They can also enhance the flow of monetary policies.

However, the main reason the Central Banks are supporting the CBDCs is that they can govern, issue and back them.

The Bank of Uganda is also joining its African counterparts. The bank shared the news that it will explore the implementation of the Ugandan Central Bank Digital Currency. 

Other countries, such as the Central African Republic, are moving to accept Bitcoin as a legal tender, a huge move for adoption in the country.