'Desist from facilitating trade in crypto assets' Uganda warns banks, fintechs

·2 min read

Uganda’s financial regulator has warned payment service providers from enabling cryptocurrency transactions in the East African country.

The Bank of Uganda, in a letter, said it had not licensed any payment provider or operator, including banks or fintechs, to sell or facilitate trade using crypto -- while also making reference to the government’s stand that crypto is still not legal tender. Payment providers found selling or facilitating trade will have their licenses revoked, the bank said.

“Bank of Uganda has noted press reports and adverts advising the public that they can convert crypto currencies into mobile money and vice versa. We are also aware that such conversion cannot happen without the participation of the Payment Service Providers and or Payment System operators,” the bank’s acting director Andrew Kawere, said in a statement, according to this report.

“This is to advise that Bank of Uganda has not licensed any institution to sell crypto-currencies or to facilitate the trade in crypto-currencies. This is in line with the official Government position…this is to warn all licensed entities under the National Payment Systems…to desist from facilitating crypto currency transactions.”

Uganda’s stern warning comes about a year after Nigeria once again ordered financial institutions -- including deposit-taking banks -- to close down all accounts trading in or operating cryptocurrency exchanges.

Meanwhile, even as some governments continue to stifle cryptocurrencies, their adoption across Africa -- the highest globally -- is growing exponentially.

Just one week ago, bitcoin became legal tender in Central Africa Republic (CAR) after the country’s parliament unanimously passed a bill governing the use of cryptocurrencies. A country of 5.4 million people according to the World Bank, and one of the poorest countries in the world despite being rich in resources like diamond and gold, the CAR became only the second country in the world to legalize bitcoin, after El Salvador. Interestingly, the CAR only has 10% of its population connected to the internet.