Wakilii

Kayondo v Bank of Uganda (Miscellaneous Cause No. 109 of 2022)

High Court · [2023] UGHCCD 113 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for judicial review of Bank of Uganda regulatory circular on cryptocurrency transactions
Decision
Application for judicial review dismissed on the merits after court found Bank of Uganda acted lawfully within its regulatory mandate

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the application for judicial review of Bank of Uganda's circular prohibiting payment system licensees from facilitating cryptocurrency transactions. The court held that the matter was amenable to judicial review but that Bank of Uganda acted within its constitutional and statutory mandate in issuing the circular. Cryptocurrencies are not recognized under Uganda's current national payment system framework, and Bank of Uganda had regulatory authority to direct its licensees to desist from processing such transactions. No procedural impropriety, illegality, or irrationality was found, and no legitimate expectation arose from Ministry of Finance statements that merely cautioned the public about cryptocurrency risks.

Outcome

Application for judicial review dismissed on the merits after court found Bank of Uganda acted lawfully within its regulatory mandate

Facts

The applicant, a peer-to-peer retail investor in cryptocurrencies, sought judicial review of Bank of Uganda's circular dated 29 April 2022 which prohibited all licensees under the National Payment Systems Act 2020 from facilitating cryptocurrency transactions. The circular was issued to all payment system licensees warning them to desist from processing cryptocurrency transactions, citing risks to consumers, monetary stability, and payment system safety. The applicant became aware of the circular when Yellow Card application notified him that exchange of cryptocurrencies through mobile money had been halted. The applicant argued that cryptocurrencies were legitimate digital assets not expressly banned by law, that he had issued a notice of intention to sue which was not satisfactorily addressed, and that the circular was illegal, irrational, and procedurally improper because it was issued without stakeholder consultation and contradicted Ministry of Finance statements that did not declare cryptocurrencies illegal.

Issues

  1. Whether the matter is amenable to judicial review?
  2. Whether the Respondent's Circular issued on 29th April 2022 is tainted with illegality, irrationality, and procedural impropriety?
  3. What remedies are available to the parties?

Orders

  • Application dismissed.
  • Each party to bear its own costs.

Rules and key headnotes

Amenability to Judicial Review — Regulatory Directives by Statutory Bodies
A regulatory directive issued by a statutory body such as Bank of Uganda to its licensees is amenable to judicial review where the applicant challenges the decision-making process and alleges that the body exceeded its statutory mandate, notwithstanding that the directive is addressed to licensees rather than the general public.
Central Bank Regulatory Powers — Scope of Mandate under National Payment Systems Act
Bank of Uganda's constitutional and statutory mandate to regulate payment systems, maintain currency stability, and issue directives to payment system licensees under the National Payment Systems Act 2020 sections 4, 19, and 20 includes the power to prohibit licensees from facilitating cryptocurrency transactions where such transactions pose risks to the safety and efficiency of the regulated payment system, even where cryptocurrencies are not expressly banned by legislation.
Cryptocurrency Regulation — Status under Ugandan Law
Under Uganda's current legal framework, cryptocurrencies are not recognized as legal tender or as part of the regulated national payment system. The fact that an asset or activity is not expressly prohibited by legislation does not make it lawful to integrate that asset into the regulated payment system without appropriate regulatory authorization. Being unregulated does not confer a right to operate within or through licensed payment system operators.
Procedural Fairness — Duty to Consult Stakeholders
Where a statute grants a regulatory authority discretion to consult stakeholders as it considers appropriate, the authority is not required to conduct consultations before issuing regulatory directives, particularly where the affected parties operate in an unregulated area not recognized by the legal system and where the number of potential stakeholders is undefined and consultation would be manifestly impossible. Section 4(4) of the National Payment Systems Act leaves Bank of Uganda with discretion on when to conduct stakeholder consultations.
Legitimate Expectation — Requirements for Maturity of Claim
A legitimate expectation arises only where a public authority makes a clear, unambiguous, and unqualified representation or promise regarding continuation of an existing situation or a future course of action. A public statement by the Ministry of Finance cautioning the public about risks in cryptocurrency trading and stating that government does not recognize cryptocurrency as legal tender does not create a legitimate expectation that cryptocurrency transactions will be permitted through licensed payment systems.
Grounds for Review — Illegality, Irrationality, and Procedural Impropriety
A decision by a regulatory authority survives judicial review where it is taken within the four corners of the statutory powers granted, is based on rational considerations related to the authority's statutory objectives, and complies with applicable procedural requirements. The discretionary powers conferred on a public authority without express reference to procedure must be exercised in accordance with the implied purposes attributed to the enabling legislation, and procedural impropriety arises only where there is a clear statutory provision imposing the procedural duty alleged to have been breached.

Legislation cited (17)

Cases cited (13)

  • Mpiima David v Uganda Cancer Institute and Attorney General (Miscellaneous Cause No. 182 of 2020)
  • Touch Media T/A Touch Media FM Ltd v Uganda Communications Commission (Miscellaneous Cause No. 13 of 2021)
  • Kuluo Joseph and 2 Others v Attorney General and 6 Others (Miscellaneous Cause No. 106 of 2010)
  • Internet and Mobile Association of India v Reserve Bank of India Writ Petition No 528 of 2018
  • Andrew Kilama-Lajul v Uganda Coffee Development Authority and Another (Miscellaneous Cause No. 270 of 2019)
  • United Policyholders Group and Others v The Attorney General of Trinidad & Tobago Privy Council Appeal No.0017 of 2015
  • Uganda Clearing Industry and Forwarding Association v Kampala Capital City Authority and Another (Miscellaneous Cause No. 439 of 2017)
  • Pastoli vs Kabale District Local Government Council and Others [2008] 2 EA 300
  • Council of Civil Unions vs Minister for the Civil Service [1985] AC 2
  • Save Britain's Heritage v Number One Poultry Ltd [1991] 153
  • Preston v Inland revenue Commissioner [1985] AC 835
  • R v Ministry of Agriculture Fisheries and Food Ex p Hamble Fisheries (Offshore) Ltd [1995] 2 All ER
  • Paponette v Attorney General of Trinidad & Tobago [2012] 1 AC 1

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Kayondo v Bank of Uganda (Miscellaneous Cause No. 109 of 2022) [2023] UGHCCD 113 (24 April 2023)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.