The government told Ugandans in 2019 that cryptocurrencies are not supported by assets or government guarantees. As a result, investors are completely considered to be in danger of loss or depleting worth
The Bank of Uganda also warned the public against using cryptocurrencies to conduct business, claiming that no entity has been licensed to provide the services.
In a warning dated April 29, the director of the national payments system, Mr. Andrew Kawere, stated the Central Bank has detected with alarm some organizations advertising cryptocurrency conversion into mobile money and vice versa, which he said is prohibited.
The Bank of Uganda (BoU) recently issued a circular warning all payment service providers, particularly mobile money operators, to refrain from enabling bitcoin transactions.
According to a local magazine, the Bank of Uganda (BoU) issued a circular in which it expressed worry over some organizations promoting crypto to mobile money conversions and vice versa, which is deemed illegal.
The Bank of Uganda has noted press stories and advertisements informing the public that cryptocurrencies can be converted into mobile money and vice versa, according to the BoU.
The bank is also cognizant that such a conversion would be impossible to complete without the involvement of payment service providers and/or payment system operators.
As a result, the top bank cautioned payment participants that its stance on cryptocurrencies had not changed since 2019 when it announced that financial service providers were not permitted to enable or even trade directly in cryptocurrencies.
As a result, the bank stated that it will not think twice to use its powers under Ugandan law if any licensees are discovered to be in violation of the foregoing directive.
Furthermore, the Bank of Uganda stated that cryptocurrencies are not considered legal money, and so, owners of such financial assets are not protected if their holdings lose value. Moreover, there is no recompense available if the owners of such assets fail to deliver on their promises.
According to the bank, cryptocurrencies can be used for a variety of illegal activities, including money laundering, the sale of illegal products and services, and fraudulent businesses like Ponzi and pyramid schemes.
Seeing as crypto trading is illegal in many African countries, holders discovered that the only way to conduct crypto transactions is through peer-to-peer (P2P) networks.
However, with this new sanction on the country’s only way to trade crypto, the number of people trading in the country is likely to drop dramatically, causing more losses for participants as there may be no place for them to sell their investments.
Furthermore, many young people in African countries have come to embrace crypto investing as the only method of escaping poverty and thus establishing jobs for themselves.
As a result of this sanction, the country may face high youth unemployment and an increase in the prevalence of illicit activities.
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