Finance Minister Matia Kasaija has issued a strong warning to Ugandans investing in cryptocurrencies, saying the government does not recognize them and citizens are on their own.
A Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank of any country. This implies that anonymous people are in control of the system handling this digital currency.
There are tens of cryptocurrencies, including Bitcoin, Litecoin (LTC), Ethereum, Ripple (XRP), and Bitcoin Cash. In developed countries, there are machines where one can mine these coins and get hard cash, which is not the case for Uganda.
At the moment, there are social media posts imploring Ugandans to invest in cryptocurrencies as a means of making their savings grow. But Kasaija told reporters at the Uganda Media Centre on Monday morning that the government will not be held responsible in case anyone loses money to organisations selling cryptocurrencies.
He says that the use of cryptocurrencies is a fraud and no Ugandan should spend their money.
Kasaija said the currencies are exposed to risks, including fraud, and the fact that they are not backed by any assets makes it a high-risk venture. When one loses, they lose everything and no one is compensated.
Richard Mayebo, the executive director of risk and strategy management at the Bank of Uganda said that the government is telling Ugandans to go into this well-aware of the risks involved.
As a Central Bank, he said, they don’t believe cryptocurrencies meet all the characteristics of genuine currency.
Bank of Uganda has previously warned the public against this sort of money with Dr Louis Kasekende, the Deputy Governor, saying that it was risky to use online cryptocurrency because there were no regulations on their use in Uganda.
“Let me state clearly that the online cryptocurrency businesses are not regulated at the moment and therefore carry a significant risk of loss of savings, with no recourse to protection or insurance by government…,” Kasekende told a town hall meeting in Masaka