The Bank of Uganda is open to the idea of cryptocurrency businesses participating in its Regulatory Sandbox, inviting members of the Blockchain Association of Uganda (BAU) to share their expertise with the central bank.
A letter from the bank dated June 1 to the chairperson of the BAU, Kwame Rungunda, referred to a meeting between the two parties in early May.
The central bank also advised the country’s crypto advocacy group to brush up on the sandbox regulations before it made time for further technical discussions.
The bank created a regulatory sandbox framework in June 2021, allowing financial technology (fintech) firms to test “new financial solutions” in a regulated environment, with the goal of increasing the use of electronic payments and other digital financial services in the country.
The Bank of Uganda’s recent letter appears to be a U-turn in its stance on bitcoin.
The bank issued a warning on cryptocurrencies in late April, notifying all payment service providers in the country that permitting crypto transactions would expose the country to money laundering and scams.
The bank also said any provider found to be aiding the trade of cryptocurrencies, such as a bank or fintech firm, would have their financial license revoked.
Cryptocurrencies are not prohibited in Uganda, and they can be bought, kept, and exchanged. Cryptocurrencies, on the other hand, remain unregulated, and no company has yet been granted a digital asset license to operate in the country.
Crypto adoption in Africa is gaining traction, attracting the attention of a number of venture capital firms and crypto firms. Crypto use in Africa surged by approximately 1,200 percent between 2020 and 2021, with nearly 2% of Ugandans using it.