Bank Of Uganda To Crack Down On Mobile Money Operators Facilitating Crypto Transactions
The Bank of Uganda (BoU) has issued a circular to all payment service providers, especially mobile money operators, reminding them to refrain from facilitating cryptocurrency transactions.
According to a local publication, the BoU said in a circular that it noted with concern certain entities advertising crypto-to-mobile-money conversions, and vice versa, which was called illegal.
“The Bank of Uganda has noted news articles and advertisements informing the public that they can convert cryptocurrencies to mobile money and vice versa. We are also aware that such conversion cannot take place without the participation of 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 stance on cryptocurrencies has not changed since 2019 when it stated that it does not allow financial service providers to facilitate the trading in cryptocurrencies, or even trading directly.
As such, the bank said it would not hesitate to invoke its powers under Ugandan laws for any licensee found to be in breach of the above directive.
Additionally, the Bank of Uganda reiterated that it does not recognize cryptocurrencies as legal tender and therefore the owners of these financial assets are not protected if their holdings lose value. Also, there is no compensation if the holders of such assets fail to deliver what they promised.
According to the bank, cryptocurrencies are easily exploited for a myriad of bad practices, including:
- money laundering
- Sale of prohibited goods and services
- Fraudulent companies 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 decrease in value as the issuers are not obliged to exchange them for legal tender or other value.
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