KAMPALA – Cryptocurrency continues to spread across the globe. Several countries have begun to switch over to this digital money as standard currency. Thus, they need to purchase crypto to use it. This is why calls for regulations have gone out.
The Call for Rules
Uganda’s Financial Intelligence Authority (FIA) has asked the government to come up with clear regulations on how cryptocurrency is handled. This stems from a conference call with crypto stakeholders. According to the FIA, noncompliance by industry representatives has precipitated the need for regulations.
This is despite the rules already put in place by the FIA. Recently, they amended their Anti-Money Laundering (AML) laws to include virtual asset providers (VAPs) like crypto. However, few of these organizations have registered with the Ugandan government. The remainder of the platforms operates outside of the AML bubble.
In turn, the FIA is unable to maintain proper oversight of the country’s crypto market. This raises alarms not only due to money laundering but also investment scams. As crypto has gained popularity, those with malicious intent have removed millions in cryptocurrency from its victims. For instance, 5,000 customers of Dunamiscoins lost funds due to its alleged Ponzi scheme.
In total, 200,000 Ugandans lost crypto to digital money scammers. Over the last two years, over $1 billion has been taken.
Then there are the concerns related to the desires of global music star Akon. He has gained approval from the Ugandan government to build a futuristic city powered by cryptocurrency. This alarms the FIA due to the eventual wide use of the VAP.
Though the FIA has continually asked for the creation of these regulations, government authorities have yet to consider them. For instance, the Bank of Uganda, the country’s central bank, has focused on the refinement of payment service provider (PSP) guidelines instead. This has put VAP regulations on the back burner.
It’s unknown if the Ugandan government will move up a discussion of cryptocurrency regulations once PSP is implemented.
Consequences of an Unregulated Crypto Environment
There are several consequences related to an unregulated crypto environment. Foremost is the theft of bitcoins and other cryptocurrencies through misinformation. Despite the security provided by blockchain technology, those with malicious intent can obtain PIN codes and keys through customer manipulation.
Money laundering is also increased. Not only does this stolen cryptocurrency feed criminal agents in Uganda. It also helps fund terrorist organizations across the globe.
Not the First
Uganda isn’t the first African country to be affected by cryptocurrency scammers. In February of 2021, Nigeria’s central bank ordered a ban on digital money. Accounts of those who traded and purchased crypto were closed without warning.
Uganda’s FIA doesn’t want the situation to escalate in this manner. Thus, the reasons for regulations. A central authority doesn’t exist for cryptocurrency. Therefore, it’s up to individual countries to set limits.
The situation in Uganda is something cryptocurrency investors and purchasers should be aware of. Review all opportunities carefully before executing any transactions. This is especially true if you must provide personally identifiable information (PII) to the company in question.