Uganda's ministry of finance and the central bank have urged consumers not to use cryptocurrencies, saying the government does not recognise them as legal tender.
Uganda has joined dozens of countries trying to deter people from buying things online with these digital currencies.
Central banks around the world have expressed concerns about the increasing use of currencies like Bitcoin and Ethereum, which are created by a complex mathematical digital formula.
Bitcoin in particular has fluctuated wildly in value.
The Ugandan government has warned people that most cryptocurrencies are not backed by assets or government guarantees, which can make them worthless.
The finance ministry has also warned cryptocurrency users in Uganda that they are not entitled to any consumer protection.
Finance Minister Matiya Kasaija says the government is examining its legal options to clamp down on digital currencies, which have been used by criminals for money laundering, or the sale of prohibited goods.
However, when managed carefully they can be useful as a means of trade over the internet.