Tanzania issues warning against cryptocurrencies

Thursday March 1 2018

Bitcoin

Bitcoin is the most popular cryptocurrency globally. Digital currencies continue to gain more traction in East Africa. PHOTO | JENS KALAENE 

By VICTOR KAREGA
More by this Author

The Bank of Tanzania (BoT) has warned the public to act with extreme caution when trading in cryptocurrencies.

The central bank is among other East African regulators that have cautioned citizens against the lure of digital currencies, which they say have no legal backing.

The rise of prices of cryptocurrencies prices, especially Bitcoin --the most popular digital currency globally-- has made them appealing.

“BoT considers the recent surge in the prices of cryptocurrencies to be driven by speculation. The risk of a sharp reduction in prices is high. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital,” said Abdul Dolla, BoT’s Assistant Manager, Safe Custody Centre.

While Tanzania has not officially banned Bitcoin, the central bank does regulate cryptocurrency transactions.

Cryptocurrencies are digital monies that use cryptic algorithms for security and run on a complex code system called blockchain.

Cryptocurrency transactions are generally anonymous and are not subject to any government or central bank regulation.

This, the regulators warn, make them safe havens for money laundering, terrorism financing, tax evasion and fraud.

“BoT notes that before investing in cryptocurrencies, members of the public should carefully consider the claims being made about the products being offered...if the touted ease of making significant profits sounds too good to be true, it probably is,” Mr Dolla said.

Kenya and Uganda have both issued advisories against trading in cryptocurrencies.

Rwanda remains cautious about the risks involved and is yet to take an official position on cryptocurrency.

In Africa, Algeria plans to issue a cryptocurrency ban while in Egypt, top cleric grand mufti Shawki Allam in January endorsed Bitcoin trading ban citing concerns about money laundering and terrorism funding.

Advertisement