The Bank of Uganda has advised members of the Blockchain Association of Uganda to understand more about cryptocurrency sector. The bank has stated that it will be glad to work with crypto platforms in its forthcoming Regulatory Sandbox.
It referenced a meeting between both parties early last month in a letter addressed to Kwame Rugunga, the Blockchain Association of Uganda (BAU) chairman, dated June 1. According to the central bank, the group should improve the regulations before another discussion on technical issues.
The Previous Regulatory Framework
In June 2021, the central bank developed a regulatory framework that enabled FinTech companies within the country to test diverse financial solutions. But, the test phase will occur in a controlled environment while hoping to develop Uganda’s adoption of e-payments and other digital solutions.
But it seems the BOU is no longer too supportive of cryptocurrency. Amazingly, the BOU released a recent letter stating its perspective on Bitcoin and the overall crypto industry.
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Earlier this year, in April, the bank released a warning against cryptocurrencies. It stated that payment gateways that enable cryptocurrency transactions and payments would further increase the possibilities of crypto scams and money laundering.
Furthermore, it stated that citizens should refrain from using cryptocurrencies and cryptocurrency exchanges like Binance, OkCoin, Changelly, Coinmama, or CEX. In addition, the statement revealed that financial companies and fintech firms providing cryptocurrency solutions would lose their licenses.
The primary reason for the initial ban was because, according to the statement, many citizens have lost millions in crypto scams.
Hope For Cryptocurrency In Uganda And Africa
Ugandans are not entirely losing access to crypto. Users can buy, trade, and save cryptocurrencies. But, crypto is still unregulated, and currently, no crypto firm in the country has a license to run business in the country.
The digital asset industry has become more accepted and adopted around the world. As a result, African growth in the industry is also skyrocketing.
This growth is attracting many cryptocurrency firms and venture capital companies. Interestingly, crypto adoption in Africa has increased by 1,200% from 2020 to 2021. For example, in Uganda, at least 2% of the citizens use cryptocurrency.
The speed of crypto adoption is also sweeping across many countries worldwide. In 2021, El Salvador became the first country to facilitate Bitcoin as a legal tender. Other countries are also showing strong support for cryptocurrency.
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For instance, KenGen, one of Kenya’s energy firms, encouraged Bitcoin miners to come into the country and utilize its geothermal energy.
This effort can increase the Kenyan government’s revenue via crypto taxes and mining fees. Thus, Uganda and other African countries aim to advance their economies by accepting cryptocurrencies.
Featured image from Pexels, chart from TradingView.com