Sri Lanka's Central bank warns public on possible risks in crypto trade

Representative Pic

The Central Bank of Sri Lanka has put out a warning of the possible exposure to significant financial, operational, legal, and security-related risks posed by investments in virtual currencies, essentially cryptocurrencies, while asking them not to fall prey to such types of virtual schemes offered through the Internet.

The advisory has been put out considering the recent developments in relation to virtual currency used in the international and domestic markets as well as the inquiries related to it.

Virtual currencies are largely unregulated digital representations of value that are issued by private entities and can be electronically traded.

"As informed to the public previously by CBSL through press releases in 2018 and 2021, CBSL has not given any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorized any Initial Coin Offerings (ICO), mining operations or Virtual Currency Exchanges," the Sri Lankan central bank said in a statement.

Furthermore, debit cards and credit cards are not permitted to be used for payments related to virtual currency transactions, as the latter are considered unregulated financial instruments and have no regulatory oversight or safeguards relating to their usage in Sri Lanka, the statement added.

The island country is currently facing its worst economic crisis and is running low on foreign reserves needed for imports. Besides, it has defaulted on its debt for the first time in its history.

It is important to note that the cryptocurrency market has been going through a turbulent phase, and a few crypto service providers have gone bankrupt.

The price of Bitcoin has dropped by as much as 75 per cent from its all-time high over the past seven months, and it has declined almost 60 per cent in the three months since April. Most other prominent crypto-assets have experienced even steeper declines over the same period.

This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever.