Uganda
Retail_Trading_Status
- Analysis ID
- #815
- Version
- Latest
- Created
- 2025-12-12 05:21
- Run
- 72edf93a...
- History
- View all versions
- Workflow Stage
- Step 1
Executive Summary
Retail cryptocurrency trading in Uganda operates in a regulatory 'Gray-Zone' characterized by conflicting directives from different government bodies. While the possession and trading of cryptocurrencies by individuals are not criminalized, the Bank of Uganda (BoU) enforces a strict prohibition on licensed financial institutions from processing crypto-related transactions, effectively cutting off formal banking access. Conversely, the Financial Intelligence Authority (FIA) requires Virtual Asset Service Providers (VASPs) to register for anti-money laundering (AML) compliance, creating a paradox where crypto businesses are legally obligated to register but are practically de-banked. A recent policy shift in December 2025, dubbed the '6 Pillars' framework, signals a move toward formal regulation, but a fully licensed regime is not yet operational.
Key Pillars
Bank of Uganda (BoU): Primary regulator for payment systems; currently enforces a ban on banks facilitating crypto transactions (Circular NPSD 306).
Financial Intelligence Authority (FIA): Mandates VASP registration and reporting under the Anti-Money Laundering Act (AMLA) to combat financial crime.
Capital Markets Authority (CMA): Asserts jurisdiction over crypto assets that qualify as securities, though no specific licensing framework for exchanges is currently active.
Uganda Revenue Authority (URA): Seeks to tax crypto gains under existing income tax laws, despite the lack of a formal regulatory license for traders.
Landmark Laws
Circular NPSD 306 (Circular NPSD 306) - Enacted: 2022-04-29
- A directive from the Bank of Uganda prohibiting all licensed entities (banks, mobile money operators) from facilitating cryptocurrency transactions or liquidating crypto assets.
- Source
Anti-Money Laundering (Amendment) Act (AMLA Amendment 2020) - Enacted: 2020-08-01
- Amended the principal AML Act to include Virtual Asset Service Providers (VASPs) as 'accountable persons' subject to FIA supervision and registration requirements.
Silver Kayondo v Bank of Uganda (High Court Misc. Cause No. 109 of 2022) - Enacted: 2023-04-24
- High Court ruling that upheld the Bank of Uganda's circular banning banks from facilitating crypto, declaring that cryptocurrencies are not legal tender and the central bank has the mandate to protect the payment system.
- Source
National Payment Systems Act (Act 2020) - Enacted: 2020-09-01
- The primary law governing payment systems, used by the BoU as the legal basis to prohibit licensed financial institutions from interacting with unregulated crypto assets.
Considerations
Banking Blockade: Local banks and mobile money agents are strictly forbidden from processing crypto transactions, forcing traders to use P2P methods.
Conflicting Mandates: VASPs face a 'Catch-22' where they must register with the FIA for AML compliance but cannot open the bank accounts necessary to operate legally.
Tax Liability: The Uganda Revenue Authority (URA) expects disclosure of crypto income for tax purposes (30% income tax/capital gains), regardless of the regulatory limbo.
Legal Status of Assets: Crypto is not illegal to hold, but it is not recognized as legal tender or a valid payment instrument within the National Payment System.
Notes
The '6 Pillars' announcement in December 2025 is a critical development that suggests Uganda is transitioning from a 'Gray-Zone' (Restriction) to 'Allowed-Regulated'. However, until the bank ban is lifted and licenses are issued, the status remains Gray-Zone. The date of the '6 Pillars' announcement (Dec 5, 2025) is very close to the current analysis date, indicating a rapidly evolving situation.
Remaining Uncertainties
- When exactly the '6 Pillars' framework will translate into enacted legislation.
- Whether the BoU will formally rescind Circular NPSD 306 before new licenses are issued.
- The specific timeline for the first batch of VASP licenses to be granted under the new regime.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading in Uganda operates in a regulatory 'Gray-Zone'. This status is defined by a lack of explicit criminalization for individual possession and trading, yet it is characterized by severe operational restrictions and conflicting directives from different government bodies. The regulatory framework is fragmented and contradictory. The Bank of Uganda (BoU), as the primary regulator for payment systems under the National Payment Systems Act (2020), issued Circular NPSD 306 on April 29, 2022, which strictly prohibits all licensed financial institutions, including banks and mobile money operators, from facilitating any cryptocurrency transactions. This directive was upheld by the High Court in the case of Silver Kayondo v Bank of Uganda on April 24, 2023, which affirmed the central bank's mandate to protect the payment system and declared that cryptocurrencies are not legal tender. Conversely, the Financial Intelligence Authority (FIA) operates under the Anti-Money Laundering (Amendment) Act of August 1, 2020, which classifies Virtual Asset Service Providers (VASPs) as 'accountable persons' required to register and comply with AML reporting. This creates a paradoxical 'Catch-22' for businesses, which are legally obligated to register but are practically de-banked and cannot operate formally. The Capital Markets Authority (CMA) asserts potential jurisdiction over crypto assets that qualify as securities, though no specific licensing framework is active. Furthermore, the Uganda Revenue Authority (URA) expects taxation of crypto gains under existing income tax laws, imposing a compliance burden on traders despite the lack of a formal regulatory license for the activity. The legal status of crypto assets is therefore one of tolerated but restricted private ownership, explicitly excluded from the formal financial system. A significant policy shift was signaled in December 2025 with the announcement of a '6 Pillars' framework, indicating a move toward formal regulation. However, as the bank ban under Circular NPSD 306 remains in force and no licenses have been issued, the operational environment remains restrictive, solidifying the current Gray-Zone status until concrete regulatory changes are implemented.
Summary Points
I. Regulatory Status
* Gray-Zone: Retail trading operates in a regulatory gray area with conflicting government directives.
* Not criminalized for individuals to hold or trade, but not recognized as legal tender.
* Formal banking access for crypto transactions is completely blocked by central bank directive.
* A transition toward formal regulation was signaled in December 2025, but not yet operational.
II. Key Regulatory Bodies
* Bank of Uganda (BoU):
* Primary regulator for payment systems.
* Enforces a strict ban on licensed financial institutions (banks, mobile money) from processing crypto transactions.
* Financial Intelligence Authority (FIA):
* Mandates registration and AML/CFT compliance for Virtual Asset Service Providers (VASPs).
* Capital Markets Authority (CMA):
* Asserts jurisdiction over crypto assets that qualify as securities; no active licensing framework for exchanges.
* Uganda Revenue Authority (URA):
* Seeks to tax cryptocurrency gains under existing income tax laws.
III. Important Legislation
* Circular NPSD 306 (Enacted: 2022-04-29):
* Bank of Uganda directive prohibiting all licensed entities from facilitating cryptocurrency transactions or liquidating crypto assets.
* Anti-Money Laundering (Amendment) Act (Enacted: 2020-08-01):
* Amended the principal AML Act to include Virtual Asset Service Providers (VASPs) as 'accountable persons' subject to FIA supervision.
* Silver Kayondo v Bank of Uganda (High Court Ruling: 2023-04-24):
* Upheld the BoU's circular, declaring cryptocurrencies are not legal tender and the central bank has the mandate to protect the payment system.
* National Payment Systems Act (Enacted: 2020-09-01):
* The primary law governing payment systems, used as the legal basis for the BoU's prohibition on crypto.
IV. Compliance Requirements
* For Virtual Asset Service Providers (VASPs): Mandatory registration with the Financial Intelligence Authority (FIA) for Anti-Money Laundering compliance.
* For Individuals/Traders: Obligation to disclose cryptocurrency income and capital gains to the Uganda Revenue Authority (URA) for taxation (subject to income tax/capital gains tax rates).
V. Notable Restrictions or Limitations
* Banking Blockade: A strict prohibition prevents local banks and mobile money agents from processing any cryptocurrency-related transactions, forcing reliance on Peer-to-Peer (P2P) methods.
* Operational 'Catch-22': VASPs face a paradox where they are required to register with the FIA but are unable to open the bank accounts necessary to operate a formal, compliant business due to the BoU ban.
* Non-Legal Tender: Cryptocurrencies are not recognized as a valid payment instrument within Uganda's National Payment System.
VI. Recent Developments or Notes
* In December 2025, authorities announced a '6 Pillars' policy framework, signaling a clear intent to move from the current restrictive gray-zone toward a formal, licensed regulatory regime (Allowed-Regulated).
* This development is very recent, indicating the regulatory landscape is in a state of active transition. However, until the bank ban (Circular NPSD 306) is formally lifted and a licensing regime is operational, the Gray-Zone status with its associated restrictions remains the de facto environment.
Full Analysis Report
Full Analysis Report
Uganda's regulatory environment for retail cryptocurrency trading is a classic 'Gray-Zone,' defined by a stark disconnect between anti-money laundering obligations and financial market access. The core of this tension lies in the Bank of Uganda's (BoU) April 2022 directive (Circular NPSD 306), which explicitly prohibits all licensed financial institutions—including commercial banks and mobile money operators—from facilitating any cryptocurrency transactions. This directive was legally solidified in April 2023 when the High Court of Uganda, in the case of Silver Kayondo v Bank of Uganda, ruled in favor of the central bank. The court affirmed that because cryptocurrencies are not legal tender, the BoU acted within its mandate under the National Payment Systems Act to protect the financial system from unregulated risks.
Despite this banking blockade, the Financial Intelligence Authority (FIA) maintains a contradictory stance. Following a 2020 amendment to the Anti-Money Laundering Act, the FIA classifies Virtual Asset Service Providers (VASPs) as 'accountable persons' who must register, conduct KYC, and report suspicious transactions. This creates a significant operational hurdle: crypto businesses are legally required to register with the FIA to avoid criminal liability for money laundering, yet they are simultaneously denied the banking infrastructure needed to operate a compliant business. Consequently, most trading activity has migrated to Peer-to-Peer (P2P) platforms and informal markets, bypassing local financial gateways.
In December 2025, the Bank of Uganda signaled a potential pivot away from this restrictive stance by announcing a '6 Pillars' regulatory framework. This proposed blueprint aims to coordinate oversight between the BoU (payments), FIA (financial integrity), and the Capital Markets Authority (investment protection). The framework outlines future plans for a licensing regime, client asset protection, and cybersecurity standards. However, as of late 2025, this remains a strategic roadmap rather than an implemented reality; the 2022 circular banning bank access has not been formally rescinded, and no full licenses have been issued to major exchanges.
For retail investors, this means that while buying and holding Bitcoin or stablecoins is not a crime, it is operationally difficult and legally unprotected. There is no recourse for fraud, and converting crypto to Ugandan Shillings (UGX) requires navigating P2P markets that operate outside the formal banking sector. The Uganda Revenue Authority (URA) continues to assert that profits from these activities are taxable, further complicating the landscape for compliant citizens who wish to pay taxes on assets that the central bank effectively ostracizes.
Uganda's regulatory environment for retail cryptocurrency trading is a classic 'Gray-Zone,' defined by a stark disconnect between anti-money laundering obligations and financial market access. The core of this tension lies in the Bank of Uganda's (BoU) April 2022 directive (Circular NPSD 306), which explicitly prohibits all licensed financial institutions—including commercial banks and mobile money operators—from facilitating any cryptocurrency transactions. This directive was legally solidified in April 2023 when the High Court of Uganda, in the case of *Silver Kayondo v Bank of Uganda*, ruled in favor of the central bank. The court affirmed that because cryptocurrencies are not legal tender, the BoU acted within its mandate under the National Payment Systems Act to protect the financial system from unregulated risks. Despite this banking blockade, the Financial Intelligence Authority (FIA) maintains a contradictory stance. Following a 2020 amendment to the Anti-Money Laundering Act, the FIA classifies Virtual Asset Service Providers (VASPs) as 'accountable persons' who must register, conduct KYC, and report suspicious transactions. This creates a significant operational hurdle: crypto businesses are legally required to register with the FIA to avoid criminal liability for money laundering, yet they are simultaneously denied the banking infrastructure needed to operate a compliant business. Consequently, most trading activity has migrated to Peer-to-Peer (P2P) platforms and informal markets, bypassing local financial gateways. In December 2025, the Bank of Uganda signaled a potential pivot away from this restrictive stance by announcing a '6 Pillars' regulatory framework. This proposed blueprint aims to coordinate oversight between the BoU (payments), FIA (financial integrity), and the Capital Markets Authority (investment protection). The framework outlines future plans for a licensing regime, client asset protection, and cybersecurity standards. However, as of late 2025, this remains a strategic roadmap rather than an implemented reality; the 2022 circular banning bank access has not been formally rescinded, and no full licenses have been issued to major exchanges. For retail investors, this means that while buying and holding Bitcoin or stablecoins is not a crime, it is operationally difficult and legally unprotected. There is no recourse for fraud, and converting crypto to Ugandan Shillings (UGX) requires navigating P2P markets that operate outside the formal banking sector. The Uganda Revenue Authority (URA) continues to assert that profits from these activities are taxable, further complicating the landscape for compliant citizens who wish to pay taxes on assets that the central bank effectively ostracizes.
Source Evidence
Primary and secondary sources cited in this analysis
"Crypto currencies under the current National Payment Systems are illegal or unlawfully and they are not accepted as general payment system instrument."
"The Bank of Uganda (BoU) has issued a coordinated regulatory blueprint to strengthen oversight on virtual assets."
"Virtual assets service providers are now in category 16 of the most vulnerable to terrorism financing and money laundering."
"Justice Ssekaana Musa ruled that under current laws... cryptocurrencies are neither legal nor recognized payment instruments."
"The invitation to the sandbox comes just a month since the bank prohibited all financial institutions from engaging in or facilitating digital asset transactions."
Web Sources (4)
Sources discovered via web search grounding
Search queries used (10)
- Is cryptocurrency legal in Uganda 2025
- Bank of Uganda regulatory sandbox crypto
- Uganda tax on cryptocurrency 2024
- Uganda Financial Intelligence Authority crypto VASP registration status
- Capital Markets Authority Uganda crypto assets position 2024
- Bank of Uganda cryptocurrency circular 2024 2025
- Bank of Uganda "6 Pillars" crypto regulation December 2025
- list of licensed crypto exchanges Uganda 2025
- Uganda "National Payment Systems Act" crypto amendment 2024 2025
- "Silver Kayondo" Bank of Uganda court ruling appeal status
https://www.ceo.co.ug/uganda-sits-on-a-trillion-shilling-crypto-market-but-without-rules-clarity-or-direction/
https://kakuruadvocates.co.ug/blogs/cryptocurrencies-illegal-uganda-high-court-judge-rules
https://scholar.ucu.ac.ug/bitstreams/b14a8da9-aeab-4d10-8b0e-982e2fd56ad6/download
https://amlsquare.com/news/germany-enforces-e45-million-fine-on-leading-global-financial-services-firm-for-anti-money-laundering-failures-2/