The High Court in Kampala has dismissed a case where a city lawyer had sought to challenge the decision of the Bank of Uganda on cryptocurrency trade.
Justice Musa Ssekaana on April 24, 2023, ruled that Cryptocurrencies under the current National Payment System are illegal, unlawful, and are not accepted as a general payment instrument.
“It would be wrong and illegal for the applicant to use the court to impose the unrecognized cryptocurrency into the regulated framework of the national payment system,” Ssekaana said.
The Court agreed with the Bank of Uganda’s lawyers from K&K Advocates that the Central Bank must protect the public from risks such as unregulated and unrecognized schemes.
Through K&K advocates, the Bank of Uganda further argued that, by its mandate under the law, the Central Bank could forbid its licensees to engage in any activity that it considers a threat or risk to economic stability.
Justice Ssekaana said the bank must protect the public from the risks associated with cryptocurrencies, such as money laundering or other illegal activities.
According to Ssekaana, a crypto-currency holder, is unrecognized by the payments system and cannot demand to be heard.
He (Ssekaana) said the bank could not consult an undefined group of stakeholders who thrive on anonymity in the economic system, like crypto-currency holders.
In October 2022, an applicant identified as Silver Kayondo, filed a case in the High Court seeking declarations that the Circular issued by the Bank of Uganda was done without prior consultation of the industry licensees. According to Kayondo, the decision was discriminatory, arbitrary, irrational, unfair, unjust, and unlawful.
Kayondo had also sought an order that crypto assets and cryptocurrencies are legitimate, albeit unregulated, digital assets, tradable in the digital economy, and can be liquidated via mobile money and other payment systems.
In addition, Kayondo asked the court to quash the circular issued by the Bank of Uganda and prohibit its implementation, however, the Bank of Uganda argued that under the national payment systems act and the Constitution of the Republic of Uganda, the bank has a broad mandate in ensuring economic stability in Uganda through regulation of the currency systems.