Crypto Regulation in Uganda

Crypto currency is not considered a legal tender in Uganda. It is not regulated by the government or central bank, which makes it risky for one to use in the country.

In October 2019 the Minister of Finance issued a public statement stating:

• “The government of Uganda does not recognize any crypto-currency as legal tender in Uganda.
• The government of Uganda has 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.
• 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”.

Source: Nabasa Law

Bank of Uganda has warned members of the public that it has not has not licensed any company or any person to offer cryptocurrency services in Uganda.

” This is to advise that 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,” a circular by Andrew Kawere, the acting director of national payments system dated April 29 says.

In the last few years, cryptocurrency has gained popularity in Uganda, especially in the urban centres.

Source: All Africa

Not Available

“Bank of Uganda is currently doing preliminary studies on whether or not a central bank digital currency should be considered … and especially explore what policy objectives it would address,” Andrew Kawere, the bank’s director for national payments, told Reuters in an interview.

“Is it financial inclusion that we want to solve, is it payments, is it to support innovations in the financial space? That is an unanswered question.”

African governments have approached digital currencies differently. Nigeria’s central bank barred local banks from working with cryptocurrencies last year before launching its own digital currency, while Central African Republic last month adopted bitcoin as an official currency, an African first.

Source: US News

A petition lodged last January by 5,000 victims of the Dunamiscoins scam—that is alleged to have stolen approximately $2.7 million from Ugandans—is likely to have influenced the government’s recent directive against cryptocurrencies.

In November of last year, Dunamiscoins Resources Limited opened in Masaka—a city three hours away from Kampala—promising Ugandans huge returns in its plan to become the country’s “digital currency network.” But it closed shop after just one month, with more than 10,000 people having lost their money.

Source: QS

In December 2020, the Financial Intelligence Authority (FIA) published a letter amending the Anti-Money Laundering Act to include virtual asset service providers (VASPs) among the list of “accountable persons” subject to supervision and monitoring by the FIA.46 Executive Director of the FIA, Sydney Asubo, however, has expressed her concerns with the substantial noncompliance of market participants to the agency’s licensing requirements, exposing market participants to even greater risks of money laundering, terrorism financing, investment scams, and more. In a recent report by the FIA, it was announced that “only a few [VASPs had] registered.” [2] Consequently, the FIA of Uganda is seeking assistance from the country’s finance ministry to establish more extensive crypto regulations, particularly with regards to these crypto service providers.

Source: Freeman Law

In a letter dated June 1, 2022, the Bank of Uganda (BoU) accepted the proposal of the Blockchain Association of Uganda (BAU) that is aimed at sharing ideas around crypto business models and testing their eligibility under the regulatory sandbox.

Pursuant to Section 16 of the National Payment Systems Act, 2020 and the NPS regulations, BoU announced [PDF] the launch of a Regulatory Sandbox Framework [PDF] that will allow fintech start-ups to test their innovative financial solutions in a controlled environment in June 2021.

As of June 2021, the then Governor of the BoU said that “So far, M/s Wave Transfer Limited received approval to test Quick Response (QR) technology under the Sandbox arrangement on April 12, 2021. Bank of Uganda invites more firms to develop and test financial innovations under the Regulatory Sandbox.”

Source: Benjamin Dada