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Sri Lanka’s Central Bank Warns About Crypto Amid Severe Economic, Political Crisis

Sri Lanka's Central Bank Warns About Crypto Amid Severe Economic, Political Crisis

Sri Lanka’s central bank issued a warning regarding the use of cryptocurrencies amid a devastating economic and political crisis. The central bank stressed that it “has not given any license or authorization to any entity or company to operate schemes” involving cryptocurrencies.

Sri Lanka’s Central Bank Issues Notice About Cryptocurrency

The Central Bank of Sri Lanka (CBSL) published a notice about cryptocurrency Tuesday titled “Public Awareness in Relation to the Use of Virtual Currencies in Sri Lanka.” The notice cites “recent development in relation to virtual currency usage in the international and domestic markets as well as the inquiries related to virtual currency.”

Noting that “Virtual currencies (VCs) are largely unregulated digital representations of value that are issued by private entities and can be electronically traded,” the Sri Lankan central bank emphasized:

CBSL has not given any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies.

The central bank further noted that it “has not authorized any initial coin offerings (ICO), mining operations or virtual currency exchanges.”

Furthermore, the Central Bank of Sri Lanka warns that “Electronic Fund Transfer Cards (EFTCs) such as debit cards and credit cards are not permitted to be used for payments related to virtual currency transactions.” The notice continues:

Therefore, VCs are considered as unregulated financial instruments and have no regulatory oversight or safeguards relating to their usage in Sri Lanka.

“The public is, therefore, warned of the possible exposure to significant financial, operational, legal and security related risks as well as customer protection concerns posed to the users by investments in VCs,” the central bank concluded. “The public is also warned not to fall prey to various types of VC schemes offered through the Internet as well as other forms of media.”

Earlier this week, protesters stormed the former Sri Lankan prime minister’s compound. President Gotabaya Rajapaksa fled the country Wednesday. He has been blamed for a deep economic crisis as Sri Lankans face acute shortages of food, fuel, and other basic supplies. Prime Minister Ranil Wickremesinghe was sworn in Friday as temporary leader.

What do you think about the Sri Lankan central bank warning about cryptocurrency amid a severe economic crisis? Let us know in the comments section below.

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