Since the inception of Bitcoin in 2009, the economic impact of cryptocurrency has been both overt and subtle. Now in its thirteenth year of existence, the digital or virtual money that takes the form of tokens or coins has established itself as a viable currency and form of investment and the economic impact of cryptocurrency is evident in a number of areas in national and global communities. 

Although the African continent receives only 2 percent of the global value of all cryptocurrencies, their rapid growth will transform financing in an increasingly digital and urban sub-Saharan Africa. In fact, a recent report by Chainalysis, found that between July 2020 and June 2021, Africans received $105.6 billion worth of cryptocurrency payments, an increase of 1200% from the year before.

Because cryptocurrency platforms bypass traditional banking services by introducing decentralized peer-to-peer lending and payment services, they can help level the economic playing field and expand finance options to underserved customer markets. While some African countries such as the Central African Republic have legalized Bitcoin, others such as Uganda haven’t warmed up to the idea yet.

Yesterday, NBS Television hosted a Twitter spaces chat to engage industry experts in a discussion about how legalizing crypto will affect Uganda’s financial landscape. 

Namajja Irene, Barry Ainomugisha, Esther Aikiriza Kagira and Brindon Bamwiine were some of the speakers that participated in the conversation.

According to Barry Ainomugisha, the Legal Counsel for the Blockchain Association of Uganda and the Co-founder of Skill Haven Africa, legalizing crypto in Uganda will have a positive impact on our economy.

He said, “If cryptocurrency is not legalized, its potential as an innovative and creative venture in terms of growth in technology is hindered.”

“Legalizing cryptocurrency will have a great financial impact on the Ugandan market. If we are going to effectively exploit all the potential of cryptocurrency and blockchain technology, we must make room for them in the regulatory framework,” he added.

However, from the authorities point of view, there is alot to be skeptical about since these digital assets can not easily be regulated. Commenting on this, Esther Kagira, the Manager Strategic Analysis and Communications at the Financial Intelligence Authority of Uganda said, 

“The fact that it is a new technology, it cannot easily be regulated and that is why we consider it a risky thing to deal with. I believe that the Government is still researching more on the crypto idea in order to release proper policies to regulate it.”

However Sydney Asubo, The Executive Director at the Financial Intelligence Authority of Uganda added, 

“Regulation of cryptocurrency is not meant to stifle innovation but to enhance compliance. Regulation will aid the industry by providing some form of protection to the public.” 

According to The Law Of Cryptocurrency and Cryptography in Uganda, a book that was written by Isaac Lubogo Christopher that examines the impact of cryptocurrency in Uganda, it is noted that policy makers should be careful to distinguish between risks and challenges. Some risks are genuine, but other concerns are just about the disruptive nature of the cryptocurrencies.

Additionally, central banks are designed to supervise  and monitor the operation of financial institutions in Uganda. The bitcoin system, although lacking a centralized system of governance, has an effect on the economy and financial operations thereunder which puts it under their control. The central bank may be currently skeptical about the rise of cryptocurrencies as well as new financial innovations but this is important to enable it fulfill its obligation to protect the interest of the depositors.

With the recent statement that was released by the Bank of Uganda (BoU) in April, Uganda does not recognize crypto as legal tender although it is reportedly moving to update its Anti-Money Laundering Act to include providers of virtual assets such as crypto as persons who can be liable for money laundering.