Financial Crime World

Cryptocurrency Compliance Issues Rock Uganda as Court Declares Digital Currencies Illegal

A Landmark Ruling with Significant Implications

A High Court Judge in Uganda has delivered a landmark ruling, declaring digital currencies illegal and impermissible as a means of payment. The ruling, handed down on April 24, 2023, has far-reaching implications for individuals and entities operating in the cryptocurrency sphere in Uganda.

Background: The Lawsuit and Ruling

The lawsuit was filed by advocate Silver Kayondo against the Bank of Uganda (BOU) over a circular issued in April 2022 that banned all entities licensed under the National Payment Systems Act from liquidating crypto assets. Kayondo argued that cryptocurrencies were outside the regulatory purview of BOU and that the circular was illegal, irrational, and arrived at with procedural impropriety.

However, the High Court Judge, Hon. Justice Ssekaana Musa, ultimately ruled in favor of the Bank of Uganda. The judge declared that the circular was not tainted with illegality or irrationality. According to the judge’s reasoning:

  • While cryptocurrencies are unregulated under Uganda’s legal regime, they do not have to be operated without sanction or contrary to the country’s existing currency system.
  • The BOU did not engage in procedural impropriety by issuing the circular without stakeholder consultations.

Implications of the Ruling

The ruling has significant implications for individuals and entities operating in Uganda’s cryptocurrency market. To ensure compliance with the law and navigate the crypto market within the bounds of the current legal framework, it is imperative that they:

  • Seek legal advice
  • Stay informed about any updates or changes in the regulatory landscape

Conclusion

The court’s decision sends a clear message to the cryptocurrency community in Uganda: digital currencies are illegal and impermissible as a means of payment. As the regulatory landscape continues to evolve, it is essential for individuals and entities operating in this space to remain informed and compliant with the law.