Amid economic and political turmoil, The Central Bank of Sri Lanka, or CBSL for short, has warned the public against buying cryptocurrencies due to a lack of regulatory oversight.
In a notice on Tuesday, the CBSL said that it has not authorized or licensed any company in Sri Lanka to offer cryptocurrency-related services, including exchanges, initial coin offerings and mining. The central bank said the warning was in response to “recent developments in relation to the use of virtual currency”, likely referring to the market crash and significant volatility in cryptocurrency prices as Bitcoin (BTC).
Virtual currencies “…are considered unregulated financial instruments and do not have any regulatory oversight or safeguards in relation to their use in Sri Lanka”, the CBSL said. “Therefore, the public is warned of potential exposure to significant financial, operational, legal, and security-related risks, as well as customer protection concerns that investments pose to users.”
The announcement comes at a time when inflation in Sri Lanka reached more than 54% in June, while the SBSL bank raised interest rates to 15.5%. According to central bank data, inflation is running at around 45% at press time, affecting the cost of living for the 22 million people living in Sri Lanka.
On Saturday, hundreds of protesters stormed the residence of Sri Lankan President Gotabaya Rajapaksa in Colombo, seizing 17.8 million rupees – about $50,000 at the time of writing – taking control of the building, using the facilities and eating stored food. Thousands of Sri Lankans have also taken to the streets of the capital in protest at the government’s response to the economic situation. Parliament Speaker Mahinda Yapa Abeywardena declared that Rajapaksa will resign on Wednesday.
Demonstrators entered the residence of President Gotabaya Rajapaksa of Sri Lanka on Saturday, amid large protests over the country’s economic crisis. The country’s political leaders have asked him to step down. https://t.co/R2N2OQLhZ9 pic.twitter.com/3tgR68dfDU
— The New York Times (@nytimes) July 9, 2022
Protesters entered the residence of Sri Lankan President Gotabaya Rajapaksa on Saturday amid widespread protests over the country’s economic crisis. The country’s political leaders have called on him to resign.
Although he has publicly expressed his warnings about cryptocurrencies, Sri Lanka’s central bank previously helped develop a “Know Your Customer” proof-of-concept project as part of a government initiative aimed at exploring the use of Blockchain technology and cryptocurrency mining. Some social media users they say being in Sri Lanka have also said that they will hold stablecoins like USD Coin (USDC) as a hedge against high inflation and bankruptcy of the country.
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