Sri Lanka is holding crypto illegally despite ongoing economic turbulence
Sri Lanka has issued a statement on the attitude to cryptocurrency warning citizens against it. In the midst of economic turmoil and political chaos, the Central Bank of Sri Lanka (CBSL) mentioned that crypto remains “largely unregulated”.
This announcement was recently issued in the wake of “recent developments in the use of virtual currency”.
The Central Bank of Sri Lanka does not consider crypto as a legal tender as it has not given any license or other authorization to any crypto entity to operate in the country.
In essence, CBSL reiterated the warnings from 2018 and 2021, referring to the fact that they have not authorized initial coin offerings (ICOs) or the operation of “schemes” related to cryptocurrencies.
Mining is also not allowed inland.
CBSL digital currencies are “unregulated financial instruments and have no regulatory oversight or security measures related to their use”.
Sri Lankans banned from trading in crypto exchanges
Cryptexchange and mining are still banned in the country. In addition, CBSL also mentioned,
Pursuant to Guideline No. 03 of 2021 of the Foreign Exchange Act, No. 12 of 2017 issued by the Department of Foreign Exchange of CBSL, electronic funds transfer cards (EFTC) such as debit and credit cards are not permitted to be used for payments related to virtual currency transactions.
This means that Sri Lankans are not allowed to use debit or credit cards to trade with crypto companies and exchanges. CBSL’s main concern remains the fact that crypto happens to fall into the “unregulated financial instruments” category.
In addition, there are no inspections or regulations that will protect the interests of users in the country. The alert asks users to avoid exposure to digital assets, as it may require legal issues.
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News comes at a time when Sri Lanka registered an all-time high inflation
The warning given comes at a time when the sovereign debt crisis has weakened the economy. Sri Lanka fell into a standard in May 2022 and continues to slump to obtain important imports from other countries.
Inflation in Sri Lanka is at a record high of 54.6% with household budgets almost exhausted. The central bank has also raised interest rates remarkably to 15.5%, which has now led to a drastic fall in savings as debt repayments have skyrocketed.
Not only this, the state has also introduced restrictions on the purchase of fuel which has dragged the population of 21.9 million into a crisis that has not been seen in the last 70 years. Along with such a crisis, the nation is also experiencing a shortage of food and medicine.
Sri Lanka faces a political crisis with hundreds of civilians protesting and marching into Sri Lankan President Gotabaya Rajapaksa’s residence in Colombo, seizing food supplies and seizing the president’s residence.
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Featured image from Vecteezy.com, chart from TradingView.com
