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Uganda Warns Public Against Cryptocurrency Scams
Kampala, May 2, 2022
The Bank of Uganda has issued a warning against fraudulent activities involving cryptocurrencies in the country. In a circular dated April 29, the Central Bank cautioned that it has not licensed any company to offer cryptocurrency services and warned individuals or entities involved in such activities that they will face stern consequences.
Warning from the Bank of Uganda
According to Andrew Kawere, Director of National Payments System at the Bank of Uganda, the institution has noted with concern advertisements promoting the conversion of cryptocurrencies into mobile money and vice versa, which is illegal. “This is to advise that Bank of Uganda has not licensed any institution to sell cryptocurrencies or to facilitate the trade in crypto-currencies,” Kawere said.
Background on Government Stance
The warning comes as a reminder of government’s stance on cryptocurrency, which was first communicated by the Ministry of Finance, Planning and Economic Development in October 2019. At the time, Finance Minister Matia Kasaija stated that the government does not recognize cryptocurrency as a legal payment system in Uganda and has not licensed any organization to sell cryptocurrencies or facilitate trade in them.
Risks Associated with Cryptocurrencies
Kasaija warned that holders of cryptocurrencies are exposed to risks such as:
- Loss of value
- Criminal transactions
- Fraudulent activities
He noted that most cryptocurrencies, including Bitcoin and Ethereum, are not backed by assets or government guarantees, making their values susceptible to fluctuations.
Growing Popularity of Cryptocurrency in Uganda
The warning has raised concerns about the growing popularity of cryptocurrency in Uganda, with many individuals and companies investing in digital currencies without fully understanding the risks involved. The Bank of Uganda’s move is aimed at protecting consumers from fraudulent activities and ensuring that only licensed entities operate in the country’s financial sector.
Lack of Regulation and Oversight
Uganda is home to several cryptocurrency companies, although their operations are not regulated by the government or any of its agencies. The warning has sparked concerns about the lack of regulation and oversight in the country’s cryptocurrency market, leaving investors vulnerable to scams and fraudulent activities.