International crypto exchange Binance announced on October 15 the launch of its fiat-to-crypto service in Uganda. The launch will be rolled out starting with support for ETH and BTC, with more digital currencies to follow. The cryptocurrencies will be available for conversion from Uganda’s national fiat (UGX) starting October 17.
The launch is in line with Binance’s action plan of market expansion through the introduction of several fiat-to-crypto exchanges in several countries. This is according to CEO and founder Changpeng Zhao, who added that Know-your-customer (KYC) procedures were already underway.
According to Binance’s CFO Wei Zhou, the launch is expected to cement sustainable economic stability in the country and the region as a whole. Binance hopes to bring more innovations to the region through such startups.
The move has been hailed by Uganda’s government as a huge step forward, despite warnings issued by the Bank of Uganda to investors against cryptocurrency risks in March 2017. The government has also registered intentions of using blockchain technology.
The move is not a sure win for Binance. On one hand, it could strengthen Africa’s grip on economic stability. On the other hand, it could backfire, as Binance doesn’t have enough experience offering a fiat-based exchange.
Crypto not legal tender: Bank of Zambia
Through a communique (in pdf) issued by the Bank of Zambia (BoZ), the Zambian government has warned that only it can issue currency. It reminded citizens that only the national currency has legal tender, adding that too many risks were associated with digital non-fiat currencies.
There has been growing public interest in cryptocurrencies that might have compelled the government to make its announcement. Notwithstanding, the government did not necessarily disclose what led to the decision other than to say that the BoZ had been receiving a significant amount of inquiries related to cryptocurrencies.
The government reiterated that it was supportive of innovations but only to desirable innovations. It warned of the risks accompanying crypto assets such as money laundering and funding terrorist activities. The BoZ statement follows a similar warning issued by the Zambian Securities and Exchange Commission this past February, which advised investors against digital currencies since they fell outside its mandated jurisdiction.
While cryptocurrencies come with some monetary characteristics—such as being used as a peer-to-peer method of payment—the Bank of Zambia noted that they did not fall within the four walls of “legal tender.”
The government defended the move, saying it was meant to protect consumers and its citizens in general against risks such as hacking, phishing and other forms of fraud. It argued that no legal recourse would be available to victims due to the absence of legislative mechanisms.
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