Why the Cease and Desist Order by Bank of Uganda barring FinTechs from facilitating Trade in Crypto Assets is not good for the Future of Finance and FinTechs


Technological know-how – enabled innovation in monetary companies (FinTech) is revolutionizing the provision of fiscal expert services and disrupting each chain in the provision of money expert services.

This disruption is reshaping the job of market gamers, the framework of the sector, business models, payments and economic merchandise.


The continued technological enhancements in the provision of monetary companies has created avenues for creating extra inclusive economic solutions that will advance fiscal inclusion in emerging marketplaces and building economies like Uganda.

The Cease and Desist Buy

Though referring to the governing administration place on cryptocurrencies communicated by the Ministry of Finance, Arranging and Economic Growth in October 2019, Lender of Uganda as a regulator of FinTechs warned all accredited FinTechs (particularly payment company suppliers or payment technique operators ) to desist form facilitating cryptocurrency transactions.

Lender of Uganda further warned that it would invoke its powers underneath the Countrywide Payment Programs Act 2020 to revoke or suspend a license of a accredited FinTech if it proceeds to facilitate trade in cryptocurrency and crypto belongings at large on grounds of failing to adhere to directives or rules issued by Lender of Uganda as a regulator and on grounds of functioning a payment method which in the feeling of the central financial institution endangers the stability of the money process of Uganda.

Is it all Risky in Crypto?

From the studying of the stop and desist buy, Lender of Uganda’s situation seems to be that any dealings in crypto belongings endangers the balance of Uganda’s economical technique.

Although it is widely acknowledged that crypto property have their pitfalls, making it possible for crypto belongings in an unregulated surroundings and be solely driven by current market forces may perhaps not provide the main policy of targets that Bank of Uganda seeks to reach by banning trade in crypto belongings.

Crypto assets function on open up, decentralized networks which offer consumers a platform to transfer, keep and receive funds with international attain with the need for financial intermediaries.

With these abilities, crypto assets and the engineering that underpins crypto belongings have presented on their own as choices that present alternatives to the inefficiencies in the current conventional monetary and fiscal program.

Crypto belongings platforms are more acquiring to make it possible for for advanced, interoperable ecosystem of financial service identified as Decentralized Finance (DeFi) which presents interoperable fiscal products and services these types of as buying and selling, escrow, collateralized lending and borrowing with out the will need of an middleman.

The distributed ledger technologies from which crypto assets operate by technological advancement has led to the emergence of decentralized fiscal infrastructures that lower or take out the purpose of intermediaries makes an ecosystem exactly where people specifically interact with every single other on a peer to peer basis and also supply open – supply platforms that can promote innovation and interoperability of fiscal services.

The skills of the technologies below which crypto belongings work and crypto assets on their own current options for establishing marketplaces like Uganda to make an effective and inclusive fiscal method which has economical remittance services and fast but much less highly-priced cross border payments which will be important for Uganda as it develops its financial system and markets.

Having said that, these chances are not able to be harnessed when we out rightly ban any dealing in cryptocurrency. On the opposite this would appeal to amplified monetary criminal offense in crypto property as criminals largely look out for large – danger jurisdictions which have no regulation all over crypto assets.

Was the Cease and Desist Purchase Justifiable?

In the Nationwide Payment Techniques Regulatory Sandbox Framework 2021, Bank of Uganda acknowledges that it is pertinent to guarantee new, more versatile methods of partaking with the money solutions market in buy to support engineering – enabled innovation in the monetary products and services field.

The National Payment Devices Coverage amid other matters emphasizes the have to have to broaden the accessibility to payment methods and as regulator of the house it ought to boost digital payments and monetary innovations.

In 2020, the 2nd Routine of the Anti – Cash Laundering Act, 2013 as Amended was amended to make a provision for Digital asset providers vendors as accountable people less than Uganda’s Anti – Dollars Laundering authorized framework.

The Act defines Virtual asset vendors as a pure or legal particular person who conducts one particular or additional of the adhering to activities i.e. trade involving digital property and fiat currencies, the transfer of virtual assets, the safekeeping or administration of digital assets or instruments enabling handle in excess of virtual assets and the participation in or provision of money expert services relevant to an insurer’s offer you or sale of a virtual asset.

In consideration of the scope of the definition digital asset suppliers, any FinTech that is engaged in facilitating trade in crypto property qualifies and an countable person below the Anti – Income Laundering Act.

In the situations the cease and desist purchase was not justifiable as FinTechs that aid trade in crypto assets are accountable people beneath the Anti- Money Laundering Act.

Bank of Uganda as a regulator would have blended synergies with the Financial Intelligence Authority to establish a framework for a collaborative regulation in the direction of combating the threats involved with trading in crypto assets.

Further more to that, as a regulator that has the power to difficulty directives or tips, it would have been progressive if the central lender had issued a guideline or directive to FinTechs facilitating trade in crypto assets to endure the regulatory sandbox as Lender of Uganda understands how to progressively regulate trade in crypto assets whilst making sure buyer safety and economical integrity.

With this the central financial institution would have taken a “test and learn” regulatory solution as it understands the positive aspects of crypto – property and their fundamental technologies while devising suggests of combating the difficulties posed by the investing in crypto.

Bank of Uganda’s stop and desist purchase consequently defeats the spirit of acquiring a regulatory sandbox as entry of new organization and introduction of new enterprise designs that are technological know-how pushed mostly depends on the technique of regulators.

The central bank’s conclusion also disregards the anti – funds laundering authorized framework whose scope encompasses entities facilitating trade in crypto assets at the expenditure of denying the industry options that crypto assets and their underlying engineering offer you.


In an emerging and establishing market like Uganda, it is critical for the Bank of Uganda to appreciate that the innovative use of know-how in finance has greatly enhanced economic inclusion and aided smaller and medium enterprises (SMEs) to entry cash considering that the conventional financial services providers have on most moments uncovered SMEs’ bankability inadequate.

FinTechs are supplying client centric solutions and processes even though endorsing inclusivity to have the earlier undeserving segments of society into the monetary program.

This potential can only be realized if Bank of Uganda’s regulatory approach is supportive of disruptive systems that are giving birth to new business versions which have the possible to encourage financial inclusion if the risks related are well recognized and combated.


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