Ugandan regulator calls for scrutiny of cryptocurrency companies

The Financial Intelligence Authority (FIA), an Ugandan government entity that controls financial transactions to combat money laundering, has asked the Ministry of Finance to formulate a regulatory framework for cryptocurrency companies. The request comes as a result of non-compliance by several players in the sector who were summoned at the end of last year to regularize the activity, according to information from the Daily Monitor.

According to the website, last weekend, FIA director Sydney Asubo commented on the matter at a meeting with non-governmental organizations in Kampala. He noted that many cryptocurrency operators continue to operate illegally in the country, making it difficult to regulate their activities.

“Cryptocurrency brokers are now in the 16th category of the most vulnerable to terrorist financing and money laundering. Last year, we gave them a month to register, but only a few did, ”said Asubo, according to the website.

Binance recently left Uganda

The central bank of Uganda has warned since 2017 at least that the bitcoin investor is taking a risk in the financial space, where there is no protection or regulatory competence.

In 2018, when Binance opened its branch in the country, Changpeng Zhao, the exchange’s CEO, said that Uganda would be the starting point for reaching other African markets, as the country has many families that depend on international remittances but are unable to open bank accounts. At the time, in the first week, 40,000 Ugandans registered on the platform. Before, they only had options like Local Bitcoin and Golix, a Zimbabwean exchange.

However, about two years later the service was stopped by Binance, shortly after the closure of its branch in the Jersey Islands. According to CZ, the consolidation of the Jersey and Uganda stock exchanges aimed at the parent company was a “business decision”.

Nigeria also goes without laws for the market

Another African country that has failed to regularize its activities with cryptocurrencies is Nigeria. One of the concerns with the sector that has been growing for a long time is the outflow of money from the country. Last month, the Nigeria Exchange Operators’ Association (ABCON) asked the country’s central bank to introduce measures to control the use of cryptocurrencies to move money abroad.

To justify the request, the association pointed out in the statement that bitcoin and altcoins have competitive advantages that would put the use of official channels at risk – transfers from Nigeria are usually made via Western Union and SWIFT.

What is known so far is that since last year, because of economic instability, Nigeria has been transforming itself into a true bitcoin nation. According to data from the P2P Paxful and LocalBitcoin exchanges, compiled by Usefultulips, in 2020 the country was the third in the world in volume of negotiations between people, behind the United States and Russia.

In a debate in February of this year, Nigerian Senator Sani Musa went so far as to say that bitcoin had become the official currency “almost useless or worthless”. At the time, lawmakers commented on cryptocurrency as an anonymous means of global transfer that is difficult to regulate.

In the same month, Nigeria’s central bank determined that banks and financial institutions should identify and close the accounts of customers who trade in cryptocurrencies. The measure resulted in the closure of local and international brokers, as they were left without access to banks.

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