Central Bank of Sri Lanka Warns About Crypto Following Severe Economic and Political Crisis

A warning has been issued by Sri Lanka’s central bank regarding the use of cryptocurrencies especially during this 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.

A notice about cryptocurrency on Tuesday titled “Public Awareness in Relation to the Use of Virtual Currencies in Sri Lanka” was published by The Central Bank of Sri Lanka (CBSL). The notice stated that the “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 re enforced:

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

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

In addition, 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 continued:

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

The central bank concluded, “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 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.”

Only early this week, protesters stormed into the former Sri Lankan prime minister’s compound. President Gotabaya Rajapaksa fled the country on Wednesday. A deep economic crisis was blamed on him as Sri Lankans faced acute shortages of food, fuel, and other basic supplies. Prime Minister Ranil Wickremesinghe was selected as temporary leader on Friday.