Sri Lanka is in the midst of a political and economic crisis, and its central bank has issued a warning to the public not to use cryptocurrencies. The Central Bank of Sri Lanka (CBSL) has warned that there is no regulatory oversight of cryptocurrencies and that any companies offering services related to them, including exchanges and ICOs, are not authorized by the CBSL.
Due to the country’s worsening economic difficulties, Sri Lankans may soon be required to declare cryptocurrencies. These difficulties include increasing inflation and unemployment. As a result, cryptocurrencies have grown in popularity as a means to safeguard their funds from turmoil.
Customers are warned to be wary of various forms of virtual currency(VC) scams distributed over the internet and other channels. The bank also stated that investors might lose all of their money if they put it into cryptocurrencies. Customers are advised against falling victim to various VC schemes offered over the internet and other media platforms.
The central bank noted that the public must be aware of cryptocurrency risks and should not invest in them. Cryptocurrencies are not legal tender and are not backed by any government. They are also highly volatile, making them a risky investment.
According to the CBSL, virtual currencies are largely unregulated digital representations of value created by private organizations and can be traded digitally. “CBSL has authorized no schemes involving VCs, including cryptocurrencies, or any initial coin offerings (ICO), mining operations, or virtual currency exchanges.
Furthermore, debit and credit cards are not appropriate for purchases involving virtual currency since these transactions are considered unlawful financial instruments with no regulatory oversight or protections when it comes to their usage in Sri Lanka.
The bank said if anyone is considering investing in cryptocurrencies, they should beware of the many scams out there. They added that people could lose all their money if not careful. They insisted that people should only invest what they can afford to lose and always consult a financial advisor before making any investment decisions.
Cryptocurrency regulation
Virtual currencies are largely unregulated digital representations of value issued by private entities and can be electronically traded. Cryptocurrencies are also highly volatile, making them a risky investment.
The central bank’s warning comes as cryptocurrency prices have been volatile recently, with Bitcoin prices fluctuating between $18,000 and $20,000. Ethereum prices have also seen similar volatility.
Sri Lanka is currently facing its worst economic crisis and is running low on foreign reserves needed for imports. Besides, it has defaulted on its debt for the first time in its history. As a result, many crypto service providers have gone bankrupt or have shut down their operations, leaving investors stranded.
Cryptocurrency regulation is a contentious global issue, with some countries taking a hands-off approach while others outright ban it. Sri Lanka’s central bank has taken a cautious approach so far, but the recent warning makes it clear that they are not comfortable with the current situation.
The cryptocurrency industry in Sri Lanka is still in its early stages, and it remains to be seen how the central bank’s latest warning will impact the industry. Cryptocurrency exchanges will likely be the most affected by the central bank’s warning. Many exchanges have already shut down their operations due to the lack of regulatory clarity. The central bank’s warning is likely to hamper further the growth of the cryptocurrency industry in Sri Lanka.
