The fourth industrial revolution is upon us and life as we know it is changing before our eyes. With the rise of technology and Artificial Intelligence a lot of services are changing in their delivery; this includes the type of currency that we use.

Crypto currency in simple terms is a digital currency that allows you to buy goods or services. It is secured by cryptography which makes it nearly impossible to counterfeit. Crypto currencies work using a technology called block chain. Block chain is a decentralized technology spread across many computers that manages and records transactions. A block chain is a public digital ledger of transactions that records information in a way that makes it difficult to hack or alter. The technology allows a secure way for individuals to deal directly with each other, without an intermediary like a government, bank or other third party.1 The anonymity of this system is what is making most governments and financial institutions in different countries very uncomfortable with the idea of embracing the use of crypto currency. The fact that it cannot necessarily be controlled by the government.

There are over 10,000 types of crypto currencies being traded world wide2, some examples being; Bitcoin (BTC) ,Litecoin (LTC) ,Ethereum (ETH), Bitcoin Cash (BCH) ,Ethereum Classic (ETC), Zcash (ZEC), Stellar Lumen (XLM) etc. And with their rise in popularity , more and more countries have began to accept and incorporate the use of crypto currency in their day to day transactions. However what do Uganda’s laws say about the use of crypto currency?

1‘What is blockchain and how does it work?’ Accessed on 2nd September 2021.

2 ‘What is crypto currency? Here’s what you should know’ Accessed on 2nd September 2021.

Legality of Crypto currency in Uganda?

Crypto currency is not considered a legal tender in Uganda. It is not regulated by the government or central bank, which makes it risky for one to use in the country.

In October 2019 the Minister of Finance issued a public statement stating:

  1. “The government of Uganda does not recognize any crypto-currency as legal tender in Uganda.
  2. The government of Uganda has not licensed any organization in Uganda to sell crypto-currencies or to facilitate the trade in crypto-currencies and so these organizations are not regulated by the Government or any of its agencies.
  3. As such, unlike other owners of financial assets who are protected by Government regulation, holders of crypto-currencies in Uganda do not enjoy any consumer protection should they lose the value assigned to their holdings of crypto-currencies, or should organization facilitating the use, holding or trading of crypto-currencies fail for whatever reason to deliver the services or value they have promised”

Furthermore; In December 2020, the Financial Intelligence Authority (FIA) published a letter amending the Anti-Money Laundering Act to include virtual asset service providers (VASPs) among the list of “accountable persons” subject to supervision and monitoring by the FIA. This was done in a bid to hold crypto service providers accountable due to the numerous reported scams in relation to crypto-currency that were being recorded in the country.

Despite the country’s legal stand on the use crypto- currency, this does not negate the fact that it has some advantages to its use, these include:


Cryptocurrency cuts out the middle man. One of the advantages of cryptocurrency transactions is that they are one-to-one affairs, taking place on a peer-to-peer networking structure that makes. This leads to greater clarity in establishing audit trails, less confusion over who should pay what to whom, and greater accountability, in that the two parties involved in a transaction each know who they are.

More Confidential Transactions

Under cash/credit systems, your entire transaction history may become a reference document for the bank or credit agency involved, each time you make a transaction. At the simplest level, this might involve a check on your account balances, to ensure that sufficient funds are available. For more complex or business-critical transactions, a more thorough examination of your financial history might be required.

Another one of the great advantages of cryptocurrency is that each transaction you make is a unique exchange between two parties, the terms of which may be negotiated and agreed in each case. What’s more, the exchange of information is done on a “push” basis, whereby you can transmit exactly what you wish to send to the recipient – and nothing besides that.

This guards the privacy of your financial history and protects you from the threat of account or identity theft which is greater under the traditional system, where your information may be exposed at any point in the transaction chain.1

1 Top 9 advantages of crypto- currency Accessed on 3rd September 2021.


A major pro of cryptocurrency is that they are mainly decentralized. A lot of cryptocurrencies are controlled by the developers using it and the people who have a significant amount of the coin, or by an organization to develop it before it is released into the market. The decentralization helps keep the currency monopoly free and in check so that no one organization can determine the flow and the value of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which are controlled by the government.1

This advantage is good for developing countries such as Uganda as it gives chance for the economy to grow.

1 Advantages and Disadvantages of crypto currency Accessed on 3rd September 2021.

Strong Security

Once a cryptocurrency transfer has been authorized, it can’t be reversed as in the case of the “charge-back” transactions allowed by credit card companies. This is a hedge against fraud which requires a specific agreement to be made between a buyer and seller regarding refunds in the event of a mistake or returns policy.

Finally, the strong encryption techniques employed throughout the distributed ledger (blockchain) and cryptocurrency transaction processes are a safeguard against fraud and account tampering, and guarantors of consumer privacy.

Disadvantages of cryptocurrency

1. Can be used for illegal transactions

Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to track down any user by their wallet address or keep tabs on their data. Bitcoin has been used as a mode of exchanging money in a lot of illegal deals in the past, such as buying drugs on the dark web. Cryptocurrencies are also used by some to convert their illicitly obtained money through a clean intermediary, to hide its source.

2. Data losses can cause financial losses

The developers wanted to create virtually untraceable source code, strong hacking defenses, and impenetrable authentication protocols. This would make it safer to put money in cryptocurrencies than physical cash or bank vaults. But if any user loses the private key to their wallet, there’s no getting it back. The wallet will remain locked away along with the number of coins inside it. This will result in the financial loss of the user.

3. Susceptible to hacks

Although cryptocurrencies are very secure, exchanges are not that secure. Most exchanges store the wallet data of users to operate their user ID properly. This data can be stolen by hackers, giving them access to a lot of accounts.

After getting access, these hackers can easily transfer funds from those accounts. Some exchanges, like Bitfinex or Mt Gox, have been hacked in the past years and Bitcoin has been stolen in thousands and millions of US dollars. Most exchanges are highly secure nowadays, but there is always a potential for another hack.

No refund or cancellation policy

If there is a dispute between concerning parties, or if someone mistakenly sends funds to a wrong wallet address, the coin cannot be retrieved by the sender. This can be used by many people to cheat others out of their money. Since there are no refunds, one can easily be created for a transaction whose product or services they never received.1

1 Advantages and Disadvantages of crypto currency Accessed on 3rd September 2021.

Existing Regulation

For crypto currency to comfortably work in a country like Uganda, there have to be regulations in place to help control it. Some of the existing regulation in Uganda today can be used to govern crypto currency should the country ever decide to legalize it, for example;

Section 3 of the Foreign Exchange act 2004 (the Act), defines “foreign currency” to mean a currency other than the legal tender of Uganda. It further defines “foreign exchange” to include banknotes, coins or electronic units of payment in any currency other than the currency of Uganda which are or have been legal tender outside Uganda. This would mean that crypto currency would fall in the category of foreign currency under the Foreign Exchange Act of 2004.

The Electronic Transactions Act 2011(ETA), the Computer Misuse Act & the Electronic Signatures Act, 2011(ESA), also provide a seemingly comprehensive legal framework for e-commerce.

In Particular, The Electronic Transactions Act, 2011 essentially provides for the use, security, facilitation and regulation of electronic communications and online transactions.

The Act (together with the Electronic Signatures Act, 2011) also significantly provides for the legal recognition of electronic transactions, records & signatures; which guarantees effective enforcement of the rights of consumers, if infringed.

The National Payment Systems Act 2020 has been enacted, and it regulates the issuance of electronic money and prescribes rules governing the oversight and protection of payment systems, instruments and other related matters.

With technology on the rise and the growth of E-commerce in the country and worldwide, the use of crypto currency might become inevitable,. Rather than banning it from the country, the government should look into ways of adapting by trying to regulate it so it is safer to use; this could be through issuing licences to crypto- service providers so they are more accountable, or enacting regulations that will help govern that area.