Last Updated: October 12, 2023
• The High Court in Uganda recently dismissed an application that sought to upend a central bank directive that bars cryptocurrency transactions.
• In his ruling, the court’s Justice Musa Ssekaana, insisted that the Bank of Uganda (BOU)’s April 2022 directive does not infringe on individual property rights.
• Silver Kayondo, a Ugandan crypto trader, sought redress via the High Court but was dismissed by Judge Ssekaana who ruled that the Bank of Uganda acted appropriately when it issued its directive.
Uganda High Court Upholds Central Bank’s Crypto Prohibition
A Judge of a High Court in Uganda has recently rejected an attempt to quash a Bank of Uganda (BOU) directive which bans licensed entities and individuals from facilitating cryptocurrency transactions.
Justice Musa Ssekaana ruled that the central bank’s crypto prohibition does not amount to an infringement on property rights, adding that it is simply an attempt to prevent the legalization of what he called “undefined system as a payment instrument in Uganda.” This echoes BOU’s warning earlier this year that violators of its directive would face repercussions under Section 13(l) (b) & (f) of the NPS Act, 2020.
Silver Kayondo’s Appeal Rejected
Immediately after the directive was issued, Silver Kayondo, a Ugandan crypto trader, sought to have it declared illegitimate by filing an appeal with the High Court. He asked for cryptocurrencies to be recognized as legitimate digital assets and for BOU’s directive to be set aside. However, his appeal was rejected by Justice Ssekaana who stated that BOU had acted correctly when issuing its order and no benefit or promise of legality had been made prior to his ruling.
No Legitimate Expectation Violated
According to Justice Ssekaana, “The applicant cannot make a claim for legitimate expectation merely because the public statement did not outlaw [cryptocurrencies]. The statement did not promise to [him] or other stakeholders that cryptocurrencies would be allowed in Uganda or would never be regulated.” He added that BOU’s directive accurately reflects Uganda’s position regarding cryptocurrencies and should not be distorted for any purpose whatsoever. As part of the ruling each party was ordered to bear their own costs for bringing matters before the courts.
Despite initial optimism amongst cryptocurrency traders following BOU’s announcement earlier this year about possible regulation, it appears unlikely now given Justice Ssekaana’s dismissal of Silver Kayondo’s challenge against it in court. It remains unclear how long this ban will remain effective however as things stand currently cryptocurrencies are illegal within Uganda.