The Bank of Uganda (BoU) has issued a circular to all payments service providers, especially mobile money operators, reminding them to desist from facilitating cryptocurrency transactions.
According to a local publication, BoU said in a circular it had noted with concern some entities advertising crypto to mobile money conversions, and vice versa, which was termed as 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 are also aware that such a conversion cannot happen without the participation of the payment service providers and or payment system operators.”
– Bank of Uganda (BoU)
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As such, the apex bank further reminded payments players that its position on cryptocurrencies had not changed since 2019 when it stated that it did not allow financial service providers to facilitate trade in cryptocurrencies, or even trade directly.
As such, the bank said it shall not hesitate to invoke its powers under Uganda laws for any licensees that will be found in breach of the above directive.
Moreover, Bank of Uganda reminded that it does not recognize cryptocurrencies as legal tender, and thus, owners of such financial assets are not protected should their holdings lose value. Also, there is no compensation should holders of such assets fail to deliver what they had promised.
According to the bank, cryptocurrencies are easily taken advantage of for a myriad of bad practices including:
- Money laundering
- Sale of prohibited goods and services
- Fraudulent ventures such as Ponzi and pyramid schemes
In 2019, the government told Ugandans that cryptocurrencies are not backed by assets or government guarantees, therefore, holders are fully exposed to the risk of loss or diminishing value as the issuers are not obliged to exchange them for legal currency or other value.
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RECOMMENDED READING: [WATCH] Under the Radar, Uganda, Ready to Become a Leading Bitcoin Player in Africa
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