'Delay to embrace cryptocurrency reforms will be costly'

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Uganda has been urged to fast-track regulatory reforms to create a conducive environment for cryptocurrency adoption, with experts warning that delays could cost the country economic opportunities in the digital finance space.

The call was made during a media briefing on June 11, 2025, at the JW Marriott Hotel in Nairobi, Kenya where stakeholders highlighted the contrasting approaches to crypto regulation in East Africa.

Legal counsel at Binance Africa Larry Cooke said while interest in digital assets is growing rapidly among Ugandan investors and entrepreneurs, the country’s regulatory stance remains ambiguous and, at times, restrictive.

“As the digital asset revolution gains momentum across Africa, Uganda stands at a crossroads,” Cooke stated.

“Meanwhile, neighbouring Kenya is forging ahead with a comprehensive legal framework that balances innovation with consumer protection and financial stability. The question now is whether Uganda will follow suit or risk falling behind.”

Cryptocurrencies are currently not recognised as legal tender in Uganda. The Bank of Uganda (BOU) has repeatedly warned the public about the risks of digital assets and maintains that no company or individual is licensed to offer crypto services within the country.

This cautious stance was reinforced by a landmark 2023 High Court ruling. Justice Ssekaana Musa declared cryptocurrencies illegal under Uganda’s current legal regime, stating that unless the BOU formally recognises them, they cannot be accepted as a means of payment.

The ruling cemented the BOU’s earlier directives, which barred institutions licensed under the National Payment Systems Act, 2020, from converting crypto to mobile money or vice versa.

Despite this restrictive environment, crypto trading continues informally, with Ugandans transacting peer-to-peer using mobile money and bank transfers. However, the lack of regulatory clarity exposes users to significant risks, including fraud, theft, and the absence of legal protection.

“There’s a private member’s bill under consideration by the Capital Markets Authority to regulate cryptocurrencies as virtual assets,” Cooke revealed.

“We’re engaging with Ugandan authorities to promote global best practices.”

Kenya's progressive model

In contrast, Kenya is taking decisive steps toward regulation. The Virtual Asset Service Providers (VASP) Bill, 2025, currently before Parliament, is set to create the country's first comprehensive legal framework for digital assets.

Allan Kakai, the legal chief at Steakhouse Financial and director at the Kenya Virtual Assets Chamber of Commerce, explained that the Bill—developed collaboratively by the National Treasury, Capital Markets Authority (CMA), and Central Bank of Kenya (CBK)—seeks to address money laundering and terrorism financing risks while fostering innovation and consumer protection.

“Kenya ranks third in Africa for crypto adoption, and lawmakers are actively working with industry experts to understand blockchain’s benefits and risks,” Kakai said.

“This is a new frontier, and proper legislation is key to protecting both consumers and investors.”

The proposed bill also introduces a 3% tax on income earned from digital asset transfers—a model already mirrored by Tanzania. Kakai believes Kenya's legal framework could become a template for the continent.

“This is not just Kenyan legislation; it's pan-African in nature,” he asserted.

“It sets the standards for what crypto dealings could look like across Africa. We just need to fine-tune it to support innovation and growth.”

Uganda's path forward

Uganda’s current approach, which is characterised by legal ambiguity, prohibitions, and public warnings, is increasingly seen as inadequate.

Cooke warned that without a clear regulatory framework, the country risks stifling innovation while exposing investors to scams and losses.

“Ugandan crypto users lack legal recourse in the event of loss or theft, and legitimate businesses operate under constant threat of sanctions,” he stressed.

“Kenya is on the verge of achieving regulatory clarity that could guide the entire East African region. Uganda needs to act or risk being left behind.”

There are signs that Uganda is warming up to the idea of regulation. In January 2025, planning state minister Amos Lugoloobi revealed that over 2.5 trillion shillings (approximately $700 million) in crypto transactions were conducted in Uganda, underscoring the size of the unregulated sector.

“Bitcoin is already being widely used in Uganda, and yet these transactions are not monitored or managed because there is no regulatory oversight,” Lugoloobi admitted.

Legal experts like Kenneth Muhangi, partner at KTA Advocates and member of the Alliott Global Alliance, confirm ongoing engagement to help Ugandan authorities adopt sound crypto regulation.

“We’re in talks with the authorities through a private member’s Bill, aiming to ensure that global standards are applied locally,” Muhangi said.

For now, Uganda’s crypto sector remains in a legal grey zone. Industry stakeholders are calling on the government to transition from restrictive measures to a progressive policy framework that recognizes both the risks and transformative potential of digital assets.

“If Uganda is to emulate Kenya’s success, it must go beyond warnings and prohibitions and adopt a proactive approach—one that encourages innovation while ensuring consumer protection,” Cooke concluded.