BoU warns of OneCoin risks as firm sets up shop in Kampala

Tuesday February 14 2017

The One Coin Digital Money offices in Kampala. PHOTO | MORGAN MBABAZI

The One Coin Digital Money offices in Kampala. PHOTO | MORGAN MBABAZI 

By Philomena Matsiko

The Bank of Uganda (BoU) has warned against use of the digital currency OneCoin, saying it has not licensed any virtual money dealers.

The Central bank joins other world regulators in cautioning citizens against the lure of digital currencies, which they say have no legal backing.

In a public statement issued Tuesday, BoU said members of the public who deal in virtual currencies are “taking a risk in the financial space where there is neither investor protection nor regulatory purview.”

The warning comes as One Coin Digital Money, also known as OneLife, has already set up shop in Kampala’s central business district at Mukwano Courts building along Buganda Road.

BoU said the firm is still in its formative stages but is aggressively encouraging members to buy digital money with promises of very high returns and rewards.

“The entity One Coin Digital Money is not licensed by the Bank of Uganda under the Financial Institutions Act (FIA), 2004 and is therefore conducting business outside the regulatory purview of the BoU,” the Central bank warned in the notice.

When The EastAfrican visited the firm’s offices on Tuesday, about 50 people were seen waiting for a company official to serve them.

They were reluctant to share with this newspaper on their mission or whether they were aware of the directive from Bank of Uganda.

But a woman, who sought anonymity, told The EastAfrican she had already invested about $100 and was expecting to reap tenfold.

“I have been investing my money since last year. So far, I have invested about Ush342,000 (about $100) in shares. I have been told I will get $1,000,” she said.

The company operates through network marketing model by recruiting potential investors through referrals from clients.

The firm says its core business is selling financial education material which is package along with OneCoins.

On its website, the firm says the business is “aimed at entrepreneurs who recognise a once-in-a lifetime opportunity,” adding that “cryptocurrency is the future of payments.”

Cryptocurrencies are computer generated units that do not enjoy any central bank or assets backing. Their value is dependent on people’s confidence in them.

Uganda’s central bank also warned against use of other digital currencies including Bitcoin, Ripple, Namecoin, Dogecoin, Litecoin, Bytecoin, Primecoin and Blackcoin.