N AM ARA

M USIN GUZI
& Co. AD V OCATES
Ex c e l l e n c e Tr a n sc e n d e n t

Legal Alert: Crypto-currencies under the current

National Payment System (Uganda) are illegal,
unlawful and unacceptable as a general payment
instrument.

1
Crypto-currencies as a general instrument of payment are illegal, unlawful and unacceptable as a general payment
instrument
Namara Musinguzi and Company Advocates
 N AM ARA
M USIN GUZI
& Co. AD V OCATES
Ex c e l l e n c e Tr a n sc e n d e n t

Attention! Silver Kayondo V Bank of Uganda Misc. Cause No. 109 of 2022(Civil
Division): judgment delivered on 24th April 2023 by His Lordship Ssekaana
Musa.
Crypto Currency Background to the case.
transactions by The Applicant filed an application for judicial review against the
consumers or investors Respondent seeking a declaration that crypto assets and currencies are
are not protected by legitimate digital assets tradable in the digital economy among other
declarations and orders. The major issue for determination by the High
government regulations Court was in relation to the facilitation of crypto currency transactions
or oversights. by entities that are licensed via the National Payments System.
Judgment of the Court
The National Payment The High Court agreed with the submissions of Counsel for the
Systems Act, 2020 which Respondent finding that crypto-currencies and assets are illegal,
unlawful and unacceptable as general instruments of payment. The High
regulates payment Court further stated that:
systems in Uganda was a) The National Payment Systems Act, 2020 was enacted to regulate
not designed with payment systems in Uganda. The Act was enacted to provide for the
crypto-currencies in safety and efficiency of payment systems as well as provide for the
functions of the central bank in relation to payment systems.
mind. b) The Respondent is mandated by the Constitution and Section 4 of the
National Payment Systems Act, 2020 to regulate, supervise and
oversee the operations of payment systems in order to ensure their
safety and efficiency. It has the duty to protect the general public from
such unregulated schemes which are yet to be recognized in our
national payment system.
c) Crypto- currencies under the current National Payment system are
illegal or unlawful and they are not accepted as a general payment
instrument. Crypto currencies are digital assets that are designed to
effect electronic payments without participation of the central
authority or intermediary as a Central Bank or licensed Financial
institution.
d) The Respondent has a duty to warn the public about the attendant
risks associated with crypto currencies or crypto assets before they
fall prey for schemes disguised as digital economy where there is
anonymity of the real players, money-laundering or other illegal
activities thrive.
e) Crypto currency transactions by consumers or investors are not
protected by government regulations or oversight. The current
regulatory framework was not designed with crypto currencies in
mind.

2
Crypto-currencies as a general instrument of payment are illegal, unlawful and unacceptable as a general payment
instrument
Namara Musinguzi and Company Advocates
 N AM ARA
M USIN GUZI
& Co. AD V OCATES
Ex c e l l e n c e Tr a n sc e n d e n t

Effect of the Court’s judgment

This landmark judgment has clearly stipulated the position of the law in regard to digital
currencies in Uganda. In as much as a growing number of the public is engaging in the trading of
the same, there is no legal protection available to them in the event that they fall prey to
unscrupulous players who are most times anonymous or in the event that the highly volatile and
speculative digital currency market collapses.
Concluding observations.
Certain countries in the world for example, Germany, Denmark, Japan, Switzerland & Spain have
legalized the trading in digital currencies albeit with strict compliance regulations to combat the
fluidity and susceptibility of digital currency to money laundering ventures.
It is therefore clear that it is a matter of “when” not “if digital currencies shall be recognized
alongside “physical currencies”. It therefore follows that the most prudent thing for governments
to do is to ensure that there are strict compliance checks in place as opposed to flatly banning the
future of currency in the world.

Namara Musinguzi & Co Advocates

Who we are
Namara Musinguzi & Co. Advocates is a boutique law firm. At Namara Musinguzi & Co. Advocates,
we meet the need for the provision of legal services that are transcendently excellent,
meticulous, solution oriented and delivered on time. The firm has an extensive and vast
knowledge in areas of corporate and compliance practices and on other legal areas including but
not limited to employment matters, arbitration, banking and litigation. The firm provides legal
services with solutions tailor made for each client.

Ann Namara Musinguzi ann@namaramusinguziadvocates.com

Managing Partner, Namara Musinguzi & Co.
Advocates

Anita Ainomugisha anita@namaramusinguziadvocates.com

Legal Associate, Namara Musinguzi & Co.
Advocates

Our contacts
Namara Musinguzi & Co. Advocates
Kanti Mansion, Plot 31 Kira Road
First floor Office 1G
P.O Box 500201,
Kampala-Uganda.
Email: info@namaramusinguziadvocates.com

Disclaimer: No information contained in this alert should be construed as legal advice from Namara
Musinguzi & Co. Advocates or the individual authors, nor is it intended to be a substitute for legal
counsel on any subject matte

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Crypto-currencies as a general instrument of payment are illegal, unlawful and unacceptable as a general payment
instrument
Namara Musinguzi and Company Advocates