The Central Bank of Sri Lanka has cautioned the public about the possible risks involved when using and investing in cryptocurrencies. The monetary authority reminded citizens that cryptocurrencies are unregulated investment tools and are not recognized as an asset class in Sri Lanka.
Sri Lanka’s Crypto Warning
The Central Bank of Sri Lanka (CBSL) issued an advisory last week to the public to beware of the “significant risks associated with using and investing in cryptocurrency.” This comes in the wake of a number of complaints from citizens who have incurred heavy losses on cryptocurrency investments and were victims of financial scams by crypto-related schemes.
The CBSL has issued several warnings about the legal, financial, and security risks related to cryptocurrency from 2018 to 2022. This has been validated by the recent failures of global institutions involved in cryptocurrency businesses, and the collapse and loss of value of some cryptocurrencies.
The public is reminded that cryptocurrency are unregulated investment tools and are not considered an asset class in Sri Lanka. Cryptocurrencies are not recognized as legal tender, and there are no regulations governing their use in the country.
On March 18, 2021, the central bank issued regulations that restrict the use of Electronic Fund Transfer Cards (EFTCs) for virtual currency transactions. Cryptocurrency can be accessed through informal channels, which could lead to the loss of valuable foreign currency without contributing to the economy.
The CBSL also warned about increasing financial frauds that promise high returns on cryptocurrency investments. These scams involve deceiving individuals to invest in fraudulent cryptocurrency projects, which circumvent traditional regulatory and legal protection mechanisms, resulting in individuals losing their money.
The public is advised that the CBSL does not have any licenses or authorizations for individuals or businesses to operate crypto-related schemes.
The CBSL has not authorized any initial coin offerings (ICOs) or any variant of it, cryptocurrency mining operations, cryptocurrency exchanges, deposit-taking or custody services related to cryptocurrency, or any cryptocurrency investment advisory service.
The central bank has urged those who are engaged in promoting and facilitating the promotion of investing and trading in cryptocurrency to refrain from such activities, considering the wide range of risks associated with cryptocurrency and the resulting hardships to the public, including financial losses.
What are your thoughts on the crypto warning from the Central Bank of Sri Lanka? Let us know in the comments below.
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