Finance Minister Hon Matia Kasaija has cautioned the public against using and investing in cryptocurrencies, saying that government has not licensed any organisation in Uganda to sell or facilitate the trade in cryptocurrencies.
These organisations, he said, are not regulated by government or any of its agencies.
Addressing journalists on Monday, Kasaija said unlike other owners of financial assets who are protected by government regulation, holders of crypto currencies in Uganda do not enjoy any consumer protection should they lose the value assigned to their holdings of cryptocurrencies or should organization facilitating the use, holding or trading of crypto currencies fail to deliver the services or value they have promised.
“The government of Uganda does not recognize any cryptocurrency as legal tender in Uganda,” he said.
“Most crypto currencies such as Bitcoin and Ethereum are not backed by assets or government guarantees, therefore holders of these crypto currencies are fully exposed to the risk of loss or diminishing value as the issuers are not obliged to exchange them for legal currency or other value,” said Kasaijja
Cryptocurrencies are digital assets that are designed to effect electronic payments without the participation of a central Authority or intermediary such as Central Bank or licensed financial institutions.
Cryptocurrencies may be used to effect anonymous electronic payments or bought and held for speculative purposes in the expectation that their value will rise at a future time, whereupon they could be sold for a profit.
While cryptocurrencies tend to change value rapidly over time, holders may make profits when their value rises but get exposed to losses when their value falls.
Though the nature of crypto currencies makes them attractive, Kasaija says they are associated with criminal transactions such as money laundering, sale of prohibited goods and services and fraudulent ventures.
“The public is advised to appraise themselves of the risks associated with cyber currencies and exercise caution before they make transactions involving such products,” he added
On the suspicion that cryptocurrency was introduced to reduce the cost of transactions, Richard Mayebo who represented deputy Governor Bank of Uganda said various innovations such as agency Banking was initiated to reduce on the cost of transaction.
He also noted that cryptocurrency is a small proportion of transacting money but added that they will not wait until it becomes big.
“Cryptocurrency does not meet the characteristics that currency should have,” he added