The Bank of Uganda has warned the public against using cryptocurrencies to transact business, saying the Central Bank has not licensed any company to offer the services.
Mr. Andrew Kawere, Director of the National Payments System, in a notice dated April 29, said that the Central Bank had noted with concern certain entities advertising the conversion of cryptocurrencies into mobile money and vice versa, which which he says is illegal.
“The Bank of Uganda has noted news articles and advertisements informing the public that they can convert cryptocurrencies to mobile money and vice versa. We are also aware that such conversion cannot take place without the participation of payment service providers and/or payment system operators. This is to advise that Bank of Uganda has not authorized any institution to sell cryptocurrencies or facilitate the trading of cryptocurrencies. This is in accordance with the official position of the government as communicated by the Ministry of Finance, Planning and Economic Development in October 2019,” reads a circular signed by Kawere.
Kawere warned that anyone or entity involved in trading these cryptocurrencies would face serious consequences.
“As a result, this is to warn all entities licensed under the National Payments Systems Act 2020 to refrain from facilitating cryptocurrency transactions. The Bank of Uganda will not hesitate to invoke its powers under Section 13(l)(b) and (f) of the NPS Act 2020 for any licensee found to be in breach of the above directive. above,” Kawere said in the notice.
Uganda is home to a number of cryptocurrency companies, although the government has not officially recognized the currency as a legal payment system in the country.
This is not the first time the government has warned the public against the use of cryptocurrencies in business transactions.
In 2019, Finance Minister Matia Kasaija said, “The Ugandan government does not recognize cryptocurrency as legal tender in Uganda and has not licensed any organization in Uganda to sell cryptocurrency or facilitate crypto trading. -currencies”.
He added that the government has not licensed any organization in Uganda to sell cryptocurrency or facilitate cryptocurrency trading and therefore such organizations are not regulated by the government or any of its agencies.
“So unlike other owners of financial assets who are protected by government regulation, holders of cryptocurrencies in Uganda do not enjoy any consumer protection if they lose the value attributed to their cryptocurrency holdings, or if the organization facilitating the use, holding or trading of cryptocurrencies fails for any reason to deliver the services or value they promised,” he said.
According to him, most cryptocurrencies such as Bitcoin and Ethereum are not backed by assets or government guarantees, so holders of these cryptocurrencies are fully exposed to the risk of loss or decrease in value because issuers are not obliged to exchange them for legal currency or other value.
Minister Kasaija said that cryptocurrencies tend to change in value rapidly over time and while holders may make profits when their value rises, they will be exposed to losses when their value drops. “The nature of cryptocurrencies makes them attractive for use in criminal transactions such as money laundering, sale of prohibited goods and services, and fraudulent businesses such as ponzi and pyramid schemes. In conclusion, the public is urged to self-assess the risks associated with cyber-currencies and exercise caution before engaging in transactions involving such products,” he said.
Cryptocurrency is any form of money that exists digitally or virtually and uses cryptography to secure transactions.
Cryptocurrencies do not have a central issuing or regulatory authority, but instead use a decentralized system to record transactions and issue new units.
It is a digital payment system that does not depend on banks to verify transactions. It is a peer-to-peer system that can allow anyone, anywhere to send and receive payments.
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