Africa-Press – Uganda. The Uganda Revenue Authority (URA) has issued a strong call for urgent regulation of cryptocurrencies, warning that the unchecked rise of digital assets is fueling illicit financial flows (IFFs), tax evasion, and economic destabilisation.
With Uganda’s informal sector increasingly adopting cryptocurrencies such as Bitcoin, Ethereum, and Tether (USDT), URA says the lack of oversight has created a shadow economy that undermines the country’s fiscal integrity and threatens national revenue mobilisation efforts.
“Cryptocurrencies are not the enemy,” a senior URA official said. “But like any financial instrument, they must be regulated. In their current state, they offer a perfect conduit for tax evasion, money laundering, and cross-border smuggling—especially in high-value sectors like gold.”
The Authority expressed concern that peer-to-peer crypto trading platforms, particularly those operating without robust Know Your Customer (KYC) and Anti-Money Laundering (AML) measures, have become popular avenues for concealing income and transferring untaxed wealth offshore.
More than half of Uganda’s economy operates informally, creating fertile ground for tax leakages. URA warned that the rise in crypto adoption among traders, freelancers, and exporters—while beneficial for financial inclusion—has also made it easier for individuals and entities to bypass the formal banking system, rendering such transactions invisible to regulators.
One of the most troubling trends, URA noted, is the increasing use of cryptocurrency in gold smuggling. In some cases, proceeds from illicit or undocumented gold exports are converted into crypto and transferred abroad, avoiding banking oversight and taxation entirely.
Platforms such as Binance P2P and Paxful have come under scrutiny for facilitating such transactions. Without mandatory KYC checks, URA says these platforms make it nearly impossible to verify users’ identities or the source of funds, leaving major regulatory gaps.
Despite repeated warnings by the Bank of Uganda, the country still lacks a formal legal framework governing digital currencies. URA has described this as a “critical gap” that is impeding efforts to monitor and prosecute crypto-linked financial crimes.
“Public advisories are no substitute for regulation,” the official said. “We need enforceable laws that define digital assets, mandate registration and reporting for exchanges, and empower financial intelligence units to trace suspicious transactions.”
According to the Authority, a comprehensive digital asset regulatory framework should begin with a clear legal definition and classification of cryptocurrencies and service providers. It must also require all crypto platforms to implement strong KYC and AML compliance mechanisms. Regulatory bodies such as the Financial Intelligence Authority (FIA) should be equipped with blockchain forensic tools to track suspicious activities, and there must be a strong emphasis on cross-border cooperation with other East African and global financial watchdogs. Additionally, the public needs to be sensitised through education campaigns that help citizens distinguish legitimate digital finance opportunities from fraudulent schemes.
URA also stressed the need to build capacity within enforcement institutions, including training officers in blockchain analytics and digital forensics. This, they said, will be essential for detecting and curbing crypto-related criminal activity.
Across Africa, other countries are already advancing their regulatory regimes. Nigeria, for example, reversed a 2021 crypto-bank transaction ban by introducing exchange licensing requirements and adopting blockchain monitoring tools. South Africa now classifies cryptocurrencies as financial products under its Financial Advisory and Intermediary Services Act, requiring platforms to be licensed and compliant with anti-fraud protocols. Kenya is developing a more adaptive approach, using regulatory sandboxes and inter-agency task forces to balance innovation with risk mitigation.
In contrast, Uganda remains in a regulatory grey zone. URA warns that this vacuum is fast attracting bad actors looking to exploit weak enforcement structures for illicit gain.
“Crypto can be a tool for development—but only if we have the institutions, laws, and public awareness to govern its use,” the Authority concluded. “Otherwise, it will quietly erode our revenue base and undermine efforts to build a fair, secure, and accountable economy.”
As Uganda accelerates its digital transformation, URA says establishing clear rules for the crypto economy is no longer optional—it is an urgent imperative to protect the country’s financial future.
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