Ugandan central bank u-turns on crypto welcoming firms to regulatory sandbox

The Bank of Uganda is open for cryptocurrency businesses to participate in its Regulatory Sandbox. Members of the Blockchain Association of Uganda (BAU), are invited to share their knowledge with central bank.

The bank sent a June 1 letter to Kwame Rungunda (chairperson of the BAU), referring to a May meeting between the parties. The central bank advised the crypto advocacy group of the country to review the sandbox regulations before they could have further technical discussions.

We look forward working with @BOU_Official, all stakeholders in shaping the opportunity of crypto in Uganda. While proactively mitigating potential risks and ensuring consumer safety. @CmaUganda @FitspaUG https://t.co/L8CMi4Fo5f
— Blockchain Association of Uganda (@blockchainug), June 4, 2022

The bank created a regulatory sandbox environment that allowed financial technology (FinTech), firms to test innovative financial solutions in a controlled setting in June 2021. This was done in order to promote the adoption of digital payments in the country.

Recent letters suggest that the Bank of Uganda has changed its approach to cryptocurrency.

The bank sent a notice to payment service providers in the nation regarding cryptocurrency warnings. It stated that allowing crypto transactions would open the country up to money laundering and fraud.

The statement also stated that any provider, such as a bank and fintech company, found to have facilitated the trading of cryptocurrencies would lose their financial license.

Cryptocurrencies are not prohibited in Uganda. They can be bought, held, traded, and even traded. However, cryptocurrencies have not been regulated and firms are yet to receive a license to use the country’s digital assets.

Related: African crypto startups grow 11x in venture funding: Report

Many venture funds and crypto companies are paying attention to crypto adoption in Africa. Between 2020-2021, crypto use in Africa increased nearly 1,200%. Nearly 2% of Ugandans also use crypto.

Other countries around the continent are adopting crypto-friendly approaches. The Central African Republic was the first African country that adopted Bitcoin (BTC), a legal tender, and the second ever.

KenGen, a state-owned energy company in Kenya, invited Bitcoin miners from around the world to come to the country to purchase excess geothermal power. This could allow its government to generate revenue via crypto mining fees and taxes.