Uganda's banking regulator Bank of Uganda has advised payment service providers against allowing cryptocurrency transactions in East Africa.
In a letter, the Bank of Uganda stated that it had not approved any payment provider or operator, including banks or fintech, to sell or facilitate trade using cryptocurrency while also referring to the government's position that cryptocurrency is still not legal cash. According to the bank, payment providers whose licenses are found to be selling or facilitating trade would have their licenses terminated.
The Bank Of Uganda Statement on Crypto Assets Trading
"The Bank of Uganda has taken note of press stories and advertisements informing the public that they can convert cryptocurrency into mobile money and vice versa." According to this report, we are also aware that such conversion cannot occur without the participation of Payment Service Providers and Payment System operators," the bank's acting director Andrew Kawere said in a statement.
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"Please be advised that the Bank of Uganda has not licensed any institution to offer or facilitate the trade-in crypto-currencies." This is consistent with the official government position to advise all licensed organisations under the National Payment Systems to refrain from assisting cryptocurrency transactions."
Uganda's harsh warning comes roughly a year after Nigeria ordered financial institutions, including deposit-taking banks, to suspend all accounts trading in cryptocurrencies or operating cryptocurrency exchanges.
Meanwhile, even as some governments discourage cryptocurrency usage, it is rising quickly in Africa, the largest internationally.
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Just one week ago, bitcoin became legal tender in Central Africa Republic (CAR) when the country's parliament unanimously enacted a statute controlling the usage of cryptocurrencies.
According to the World Bank, the Central African Republic (CAR) has 5.4 million people and is one of the poorest countries in the world, despite being rich in resources such as diamonds and gold. The CAR is only the second country to legalise bitcoin, following El Salvador. Surprisingly, barely 10% of the CAR's population is online.
