Sri Lanka’s central bank warns about the risks of cryptocurrencies

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2021-04-14 16:02:35

The central bank has listed four main concerns, including the lack of legal recourse in case of investor disputes and possible violation of foreign exchange regulations when buying cryptocurrencies from abroad.

Sri Lanka’s central bank warns about the risks of cryptocurrencies

Sri Lanka’s central bank has viewed the 2021 crypto bull market as the right time to warn the public of the risks associated with crypto investing.

In a public announcement published April 9, the Central Bank of Sri Lanka, or CBSL, outlined three types of crypto operations: mining cryptocurrencies, investing in ICO offerings. , and transact through cryptocurrency exchanges. All of this, CBSL warns, puts investors at considerable risk. Since there are no regulatory protections in place for crypto operations in Sri Lanka, the institution has identified four main areas of interest for retail investors participating in cryptocurrencies. chemical.

The first involves the lack of any specific legal or regulatory recourse against investors in case of issues or disputes regarding their investments. Second, widespread distrust of the high volatility of cryptocurrency values ​​has led banks to warn traders not to expose them to potentially large financial losses.

Third, CBSL asserts that cryptocurrencies are more likely to be involved in criminal activities, including terrorism financing and money laundering. Sri Lanka, in recent years, has been recognized by the Financial Action Task Force for efforts to prevent money laundering risks and ensure that they are removed from the so-called “gray list” of Legal problem areas.

The final warning, specific to foreign exchange regulations in Sri Lanka, requires traders to violate the country’s Foreign Exchange Act. The bank stated:

“Since VC is traded as an asset in Exchanges, buying VC from abroad will lead to a violation of Foreign Exchange Regulations, as VC is not identified as the portfolio allowed under the Foreign Act. exchange rate 12 year 2017 (FEA). Electronic transfer cards (EFTC) such as debit and credit cards are also not allowed to be used for foreign currency payments in connection with virtual currency transactions, according to the Foreign Exchange Regulations in Sri Lanka. ”

As previously reported, although CBSL may be wary of decentralized cryptocurrencies, they are still starting a national project to test their underlying technology, blockchain, to improve their capabilities. sharing and managing your Customer data.

CHK aggregated

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