Sri Lanka has released a notice regarding the stance of cryptocurrency warning citizens against it. Amid economic uncertainty and political turmoil, the Central Bank of Sri Lanka (CBSL) mentioned that cryptocurrencies remain “largely unregulated.”
This announcement was recently made following “recent developments regarding the use of virtual currencies”.
The Central Bank of Sri Lanka does not consider cryptocurrencies to be legal tender as they have not granted any license or other authorization to any crypto entity for them to operate in the country.
In essence, CBSL has restated the warnings of 2018 and 2021 on the grounds that they do not allow initial coin offerings (ICOs) or operate “plans” related to crypto assets. .
Mining is also not allowed in the country.
Cryptocurrencies according to CBSL are “financial instruments that are unregulated and have no regulatory oversight or protections associated with their use.”
Sri Lankans banned from trading with cryptocurrency exchanges
Mining activities and cryptocurrency exchanges are still banned in the country. In addition, CBSL also mentioned,
According to Directive No. 03 of 2021 under the Foreign Exchange Act, No. 12 of 2017 issued by the CBSL Department of Foreign Exchange, Electronic Funds Transfer Cards (EFTC) such as debit and credit cards are not allowed to be used for payments. transactions related to virtual currency transactions.
This means that Sri Lankans are not allowed to use debit or credit cards to transact with crypto companies and exchanges. CBSL’s main concern remains the fact that cryptocurrencies will fall into the category of “unregulated financial instruments.”
In addition, there is no regulatory or supervisory framework that will protect the interests of domestic users. The notice asks users to avoid exposure to digital assets as it could cause legal trouble.
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The news comes at a time when Sri Lanka records all-time high inflation
The warning was issued at a time when the national debt crisis has weakened the economy. Sri Lanka fell into default on its debt in May 2022 and continued to struggle to get essential imports from other countries.
Inflation in Sri Lanka is at a record high of 54.6% with household budgets almost exhausted. The Central Bank also raised interest rates significantly to 15.5%, which has now led to a sharp drop in savings due to soaring debt payments.
Not only that, but the state has imposed limits on fuel purchases that have dragged the population of 21.9 million into a crisis not seen in 70 years. Along with such a crisis, the country is also experiencing shortages of food and medicine.
Sri Lanka is facing a political crisis with hundreds of civilians protesting and marching into the residence of Sri Lankan President Gotabaya Rajapaksa in Colombo, further seizing food supplies and seizing the President’s residence. system.
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