What you need to know:
- Recently, Bank of Uganda stopped cryptocurrency payouts in an April 29 circular to payment service providers under the National Payment Systems.
Binance, the world’s largest crypto exchange has suspended cryptocurrency operations using mobile money for its Ugandan clients.
The move comes after Bank of Uganda banned cryptocurrency related payment activities using shillings.
Early this week, Binance circulated an email to its Ugandan clients announcing the suspension, which partly stated that: “Our shillings payment partners are suspending withdrawal and deposit services until further notice.”
Binance has also given a grace period window of up to May 30 for any withdrawals in Ugandan shillings.
However, Binance stated that it will continue to provide further updates on possible resumption as, “it worked closely with relevant stakeholders”.
Meanwhile, other parts of the African continent have not been affected by the suspension. “Binance remains committed to supporting growth of the blockchain ecosystem,” the statement read.
Mr Umar Sebyaala, the Celo Cryptocurrency country lead, said previously Binance had been using licensed payment processors for mobile money API integration with a platform trading in cryptocurrency collections and payouts were made through that integration.
Recently, Bank of Uganda stopped cryptocurrency payouts in an April 29 circular to payment service providers under the National Payment Systems.
“Bank of Uganda has noted press reports and adverts advising the public that they can convert crypto currencies into mobile money and vice versa. We are also aware that such a conversion cannot happen without the participation of the Payment Service Providers and Payment System Operators,” Mr Andrew Kawere, the Bank of Uganda National Payments System acting director, wrote, noting that the central bank had not licensed anyone to sell cryptocurrencies or facilitate its trade.
In 2019, the Finance Ministry warning all licensed financial institutions against facilitating cryptocurrency transactions.
The warning came at a time when cases of fraud orchestrated through ponzi schemes were on the rise with the Finance Ministry noting that despite a growing trend by Ugandans to trade in cryptocurrency, the digital assets that are designed to effect electronic payments had no participation of a central authority such as a Central Bank or licensed financial institution.
Cryptocurrencies, according the Finance Ministry are 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.