Uganda -- Stablecoin Regulations Regulatory Overview

Uganda has no stablecoin instrument of any kind: the National Payment Systems Act 2020 (Act 15 of 2020, Cap. 59) carries no occurrence of stablecoin, virtual asset, virtual currency or cryptocurrency, and its definition of electronic money reaches only monetary value issued by a licensed issuer upon receipt of an equivalent amount of funds, so no Ugandan law classifies a stablecoin as electronic money, a payment token or a security.

The Bank of Uganda's operative crypto instrument is a circular of 29 April 2022 issued under sections 13(1)(b) and (f) of the National Payment Systems Act 2020, which direct the central bank's power to act against a licensee that fails to adhere to its directives or endangers financial stability; the circular binds Bank of Uganda licensees and supervised financial institutions, names no stablecoin, and creates no statutory prohibition on issuing, holding or trading stablecoins in Uganda.

Classification (Hypothetical): If stablecoins were ever to be formally recognized and regulated, they would likely fall under the broad definitions within the National Payment Systems Act, 2020 and the National Payment Systems Regulations, 2021. These define "payment instrument," "payment system," and "e-money," which could potentially encompass stablecoins depending on their specific characteristics (e.g., if they are fiat-backed and aim to maintain a stable value for transactional purposes). However, this remains hypothetical given the current prohibitive stance.

Uganda imposes no reserve, backing or reserve-asset duty on stablecoin issuers; the only comparable Ugandan obligation is the funding rule for licensed electronic money issuers in the National Payment Systems Act 2020, whose section 47 requires electronic money to be issued only after an equivalent amount of cash is deposited in a trust account or special account, and that duty reaches no stablecoin issuer.

Sections 47, 49 and 51 of the National Payment Systems Act 2020 require a licensed electronic money issuer to issue electronic money only after an equivalent amount of cash is deposited, to apply to the Bank of Uganda for a trust account, and, where the issuer is a financial institution or microfinance deposit-taking institution, to open and maintain a special account with the central bank's approval; these duties attach only to holders of a Bank of Uganda electronic money licence and reach no stablecoin issuer.

Uganda operates no licensing regime for stablecoin issuers: section 6 of the National Payment Systems Act 2020 bars a person from offering a payment service, operating a payment system or issuing a payment instrument without a Bank of Uganda licence, and no Ugandan statute or statutory instrument creates a virtual-asset, VASP or stablecoin licence.

BoU Prohibition: The Bank of Uganda's stance, articulated in circulars, effectively prohibits regulated financial institutions and licensed Payment Service Providers (PSPs) from obtaining licenses to issue or facilitate the use of stablecoins. Any entity issuing stablecoins in Uganda would be operating outside the formal financial regulatory system.

Ugandan law confers no redemption right on a stablecoin holder; the only statutory redemption anchor is the definition of electronic money in the National Payment Systems Act 2020, which requires the instrument to be prepaid or redeemable in cash and binds only licensed electronic money issuers, so a stablecoin holder's position rests entirely on the issuer's contract.

Uganda has no rule on algorithmic stablecoins: no Ugandan statute or statutory instrument defines or addresses them, and the Bank of Uganda's 2022 circular operates on the bank's own licensees under sections 13(1)(b) and (f) of the National Payment Systems Act 2020 rather than imposing a general prohibition covering every form of cryptocurrency.

Potential Future Interaction: If Uganda were to launch a CBDC, it would likely be positioned as the primary digital form of the national currency, issued by the central bank. This could potentially reduce the perceived need or formal role for private stablecoins within the regulated financial system, as a central bank-issued digital currency would inherently provide greater stability, trust, and regulatory oversight.

National Payment Systems Act, 2020:

The National Payment Systems Act 2020 (Act 15 of 2020, Cap. 59), assented on 29 July 2020 and commenced on 4 September 2020, regulates payment systems, payment instruments, payment service providers and electronic money in Uganda, and section 6 makes a Bank of Uganda licence compulsory for those activities; the Act carries no reference to virtual assets, cryptocurrency or stablecoins and confers no power to classify them.

Statutory Instrument 68 of 2021 is the Uganda National Bureau of Standards (Certification) Regulations, 2021, which commenced on 24 December 2021, so the National Payment Systems Regulations 2021 cannot be cited as S.I. No. 68 of 2021; Uganda's payment-system rules are made under the National Payment Systems Act 2020 (Act 15 of 2020).

The National Payment Systems Regulations 2021 implement the National Payment Systems Act 2020 and set licensing, operating and supervision requirements for payment service providers and electronic money issuers; they are not Statutory Instrument 68 of 2021, which is the Uganda National Bureau of Standards (Certification) Regulations, 2021.

The Bank of Uganda circular of 29 April 2022 directs the bank's licensees not to facilitate cryptocurrency transactions, and it rests on sections 13(1)(b) and (f) of the National Payment Systems Act 2020, which supply grounds for acting against a licence holder that disregards a central bank directive or endangers financial stability; it is a supervisory direction to Bank of Uganda licensees rather than a general prohibition on cryptocurrency in Uganda.

The BoU has published various materials indicating their exploration of CBDCs. While not legislation, these show their evolving policy considerations.