Bank

Sri Lanka’s Central Bank Keeps Crypto Illegal Amid Economic Collapse

The Central Bank of Sri Lanka (CBSL) has issued a cryptocurrency advisory reiterating its stance as the country’s economy continues to slump.

On July 12, the central bank of Sri Lanka issued a public awareness notice in light of “recent developments regarding the use of virtual currency”.

He described digital assets as “largely unregulated digital representations of value,” issued by private, tradable entities.

Reiterating its previous position in notices in 2018 and 2021, the CBSL said it did not authorize or license any company operating “schemes” involving crypto assets. Therefore, crypto exchanges and mining operations remain banned in the troubled country.

No crypto access for Sri Lanka

The central bank then reminded the public that under the Foreign Exchange Act 2017, electronic funds transfer (EFTC) cards such as debit or credit cards are not permitted to be used for payments. related to cryptocurrency transactions.

In other words, Sri Lankans are not allowed to use their bank cards to transact with crypto exchanges or companies.

The CBSL concluded that the crypto assets were “unregulated financial instruments” with no oversight or safeguards for use in the country. He completed the bulletin with a veiled warning to the public about the possible legal repercussions if they meddle in digital assets.

“The public is therefore warned of the possible exposure to significant financial, operational, legal and security risks as well as client protection issues posed to users by investments in VCs. [virtual currencies].”

The warning comes amid weeks of political and economic unrest in Sri Lanka, which has seen tens of thousands of protesters flood the streets this week. Over the weekend, hundreds of protesters stormed the residence of Sri Lankan President Gotabaya Rajapaksa in Colombo, seizing food supplies and requisitioning the building. Reports were released on July 13 claiming that President Rajapaksa had fled the country for the Maldives, hours before his resignation.

The economic collapse

Inflation in the country is currently at an all-time high of 54.6% and household budgets have been stretched to breaking point. The central bank has raised interest rates to 15.5%, meaning people’s savings are being decimated as their debt repayments have increased.

Additionally, the state imposed restrictions on the purchase of fuel, plunging 22 million people into the worst humanitarian crisis in 70 years. There are also food and medicine shortages in the country.

There couldn’t be a better time to give citizens access to crypto so they can hold stablecoins as a hedge against inflation, but the central bank has other ideas.

Similar protests against runaway inflation have taken place in Albania, Argentina, Panama, Kenya, Ghana, the Netherlands, Belgium, Italy and China.

Later today, the US is expected to release its CPI inflation data for June, which is expected to be worse than May at 8.8%.

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