The deputy governor of the Central Bank of Uganda, Dr. Louis Kasekende, warned Ugandan citizens against trading in cryptocurrencies. Kasekende claimed that the use of cryptocurrencies is risky because there are no regulations or financial institutions to govern them.
As reported on June 28 during a Town Hall meeting in Masaka, Kasekende said, “Let me state clearly that the cryptocurrency businesses are not regulated at the moment and therefore carry a significant risk of loss of savings, with no recourse to protection or insurance by government, like is the case with regulated financial institutions such as commercial banks.”
Trading in cryptocurrency is a high-risk investment considering that cryptocurrencies operate on decentralized systems, he said. He insisted that the Central Bank only governs commercial banks, foreign exchange bureaus, and money remittance service providers.
These comments raised mixed emotions considering that Uganda agreed to hold the 2019 Africa Blockchain Conference. In April this year, the Director of Uganda Communications Commission, Godfrey Mutabazi, highlighted that the country was eager to adopt blockchain technology. Despite this criticism, Uganda is embracing blockchain and implementing it in different sectors across the country.
Lack of crypto knowledge a big challenge for Africa
Lack of education in Africa is playing a major role in curbing crypto progress in Africa. Consumers are still wary of adopting cryptocurrency trading because they simply don’t understand it.
Despite its growth in the African market, crypto is still facing challenges and risks. These risks include a lack of local regulation, volatility in the value of a currency, issues arising from taxation, as well as cyber fraud.
The Enterprise Sales Manager at Kaspersky, Bethwel Opil said of the company’s recent survey of the continent, “The Survey found that there is a desire among many consumers to use cryptocurrency, but a knowledge gap is getting in the way. In addition, many people who thought they knew what they are dealing with later decided against cryptocurrency.”
Opil highlights that a lack of understanding among people is the leading cause in the mistrust of crypto trading. Individuals do not believe that their investment is safe. In South Africa, a large population stopped crypto trading because investors felt that the concept was becoming too technically complicated.
Another challenge that was highlighted in the South African market was the volatility of cryptocurrencies. Most people have shied away from trading until the market stabilizes. This knowledge gap is also the key reason why fraudsters are able to take advantage of investors who are not IT savvy. In addition, many are raising the alarm on crypto cyber-attacks on exchanges.
In an attempt to remedy consumer concerns on cryptocurrency, Opil suggests that governments should set up a task force to better understand the market. Also, the task force should be able to curb crypto-related criminal activities.