Central Bank of Sri Lanka Remains Firm on Crypto Stance Despite Chaos
- The Central Bank of Sri Lanka has remained firm on its stance against crypto services in the country amidst the ongoing chaos.
Although Sri Lanka has been plunged into a state of national chaos over the last few days, it remains a no-go area for crypto activities. According to the Central Bank of Sri Lanka, crypto transactions are not regulated and, as such, are not approved.
The Central bank of Sri Lanka warned firms against offering any form of crypto service including ICOs, mining, and exchanges. The regulatory financial body released a statement where it noted its firm stance against crypto activities in the country during these moments of chaos.
The central bank said its recent warning was due to the recent developments with respect to virtual currency usage, most likely alluding to the market slump and notable volatility in the values of cryptocurrencies. The CBSL wrote in its warning,
As per the Directions No. 03 of 2021 under Foreign Exchange Act, No. 12 of 2017 issued by the Department of Foreign Exchange of CBSL, 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. Therefore, VCs are considered as unregulated financial instruments and have no regulatory oversight or safeguards relating to their usage in Sri Lanka.
The statement was made after the SBSL bank increased interest rates to 15.5 % and Sri Lanka’s inflation rate exceeded 54$ in June. Inflation in Sri Lanka, where about 22 million people reside, is currently estimated by the central bank to be over 45%.
Despite its recent warning about crypto usage, the Central Bank of Sri Lanka has previously assisted in the creation of a Know-Your-Customer proof-of-concept project as part of a government initiative to investigate the use of blockchain and crypto mining.
What Role Will Crypto Play in Rebuilding Sri Lanka?
Sri Lanka has been a hot zone since Saturday after several protesters broke into the Colombo home of Sri Lankan President Gotabaya Rajapaksa, agitating over the state of the country. The large gathering of protesters allegedly made away with about $50,000, took over the government’s facility, and used the amenities and other items in the building. Other citizens took to the street to protest against the government’s handling of the economy. Rajapaksa later announced plans to step down from power as the country plans for a new chapter.
It remains unclear what role the crypto space will play in Sri Lanka’s attempt to rebuild itself and give its citizens a better economic condition. Many crypto enthusiasts in the country reacted to the statement from the central bank, noting their plans to rely on stablecoins as a hedge against inflation.
The crypto industry could be a vital tool in rebuilding the national economy. Blockchain and cryptocurrencies are becoming a cornerstone for the global financial world and Sri Lanka could benefit from being more receptive to the industry.
Decentralized Finance, or DeFi, is one of the ways citizens can rely on crypto for more revenue. Although that sector of the crypto market is heavily unpredictable, it is also one of the most lucrative. Crypto lovers in Sri Lanka would hope to see the country become warmer to the industry.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
