Bank of Uganda welcomes digital asset firms into its regulatory sandbox


Digital asset companies will now be able to participate in a regulatory sandbox operated by the Bank of Uganda. The regulator invited the country’s leading blockchain advocacy organization to work together and share knowledge on proper digital asset integrations, a month after it banned financial institutions from facilitating Bitcoin transactions.

In a letter to the Uganda Blockchain Association dated June 1, the bank stated that it welcomes the organization’s proposal to “share knowledge with our technical teams about crypto business models and whether any use cases are eligible for tests under the regulatory testing framework”.

the central bank thrown out sandbox a year ago, in June 2021. At the time, he said the initiative would “promote innovation in financial services, attract capital and financing for fintech companies, and provide shared learning opportunities for innovators and regulators.” It would aim at promoting electronic payments, digital financial services and financial inclusion, he said. The announcement made no reference to digital assets or blockchain technology.

The sandbox invitation comes just a month since the bank banned all financial institutions from participating in or facilitating digital asset transactions.

In May, the bank’s director of national payment systems, Andrew Kawere, released a statement saying the bank had noticed an increase in payment service providers facilitating digital asset transactions. Kawere banned such activities, reminding institutions that the central bank had not authorized any payment company to conduct digital currency transactions.

However, digital currencies are not illegal in Uganda. Citizens can hold, sell or buy Bitcoin as regulations are ambiguous, just like in many other African nations.

Earlier this year, Minister of State for Finance David Bahati noted that one of the biggest challenges for the government has been regulating entities that offer Bitcoin without obtaining the required licences.

“The challenge is that the operators of such schemes register as financial institutions, but when they go live, their operations are different,” he said. indicated.

See: BSV Global Blockchain Convention Panel, Blockchain in Africa

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