The Bank of Uganda (BoU) says it is open to considering putting crypto companies in the bank’s regulatory sandbox. Blockchain The Ugandan Society has positively received the news. Andrew Kaware, director of the Bank of Uganda’s National Payment Services, passed the information to the BAU Chair. He read part of the email to BAU.
Your plea for peer learning with our technical staff on the crypto-economic model is positively given by BoU. We investigated whether the regulatory sandbox was the right environment for testing a particular use case.
The term live trial of innovative products and services in a controlled environment is commonly referred to as “Regulated sandbox.Regulatory sandboxes are becoming more prevalent as the situation in the African banking sector continues to change. The Bank of Uganda (BoU) announced in 2021 that it will develop a regulatory sandbox framework.
This regulatory sandbox framework provides rules and procedures that enable testing of financial innovation in live control systems. BoU identifies the following features related to the sandbox:
- Drive innovation in the financial sector.
- Find a way to bring investment money to financial technology companies.
- Make available opportunities for collaborative learning between entrepreneurs and regulatory agencies.
Still, at that time, cryptocurrencies were not explicitly referenced. BoU has warned all payment merchants, especially mobile money operators, to reject cryptocurrencies. The bank was contacted with a notice sent in May 2022. Many central banks have publicly announced the African regulatory sandbox. Some countries include South Africa, Kenya, Ghana and Zimbabwe.
Uganda’s strict attitude towards cryptography
On May 6, bank officials said Uganda Central Bank was considering whether to issue digital currencies. Banks did not ban cryptocurrencies, but were concerned about the dangers posed by technology.
By that time, banks were investigating whether central bank digital currencies should be considered. What’s more, they were looking for what policy goals it would achieve. Andrew Kaware, Bank’s National Expenditure Manager, commented on the CBDC.
Are we aiming to support innovation in financial inclusion, payments, or the economic arena? Unfortunately, the query doesn’t have a clear response.
African countries are taking different approaches to digital currencies. For example, the central bank of Nigeria banned local banks from using cryptography in 2017 before introducing digital currencies.
Kaware said there was no timeline for research and the establishment of digital currencies. However, they focused primarily on technology-related dangers.
Protecting the interests of our clients is one of the most important things we do as the Bank of Uganda. In Uganda, the level of understanding of digital and online finance is very low. In general, people need some protection from a fairly high degree of financial innovation.
Cryptographic status of Uganda and Africa
Despite the cryptocurrency mass, some cryptocurrency activities are underway in Uganda. Fraud and fraud are shaking the situation in Uganda’s cryptocurrencies. Earlier this year, 5,000 victims of the Dunamiscoins scam signed a petition after losing $ 2.7 million. This was one of the triggers for cryptocurrency bans in Uganda.
Between October 2019 and February 2020, five cryptocurrency companies shut down their operations in Uganda. The company disappeared with a total of over $ 26 million attributable to customers.Uganda Vulnerability Cryptographic transactions It’s huge in Uganda. Nevertheless, most people will still want to try their hand on investing.
Therefore, incorporating the crypto business into the sandbox is the right step. Regulators can evaluate how best to manage rampant fraud cases. What’s more, they can explore how good the crypto business model is to advance it.
The data suggest that there is a growing interest in cryptography across African countries. The value of the African crypto market has increased by more than 1,200% over the year 2020-2021. According to the report, Africa’s crypto economy was modest. Still, the continent was “one of the most dynamic and interesting” in the world.