Sri Lanka’s central bank is holding crypto illegally in the midst of economic collapse

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

On 12 July, the Central Bank of Sri Lanka issued a public information release in the light of “recent developments regarding the use of virtual currency”.

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

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To reiterate its previous position in announcements in 2018 and 2021, CBSL said it did not authorize or license any company operating “schemes” involving cryptocurrencies. Therefore, crypto exchanges and difficult mining are still banned in the country.

No crypto access for Sri Lanka

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

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

CBSL concluded that the cryptocurrencies were “unregulated financial instruments” without supervision or security measures for use in the country. He ended the bulletin with a veiled warning to the public about the possible legal consequences if they interfere in digital assets.

“The public is therefore warned about the possible exposure to significant financial, functional, legal and security risks as well as customer protection issues to which users are exposed 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 take to the streets this week. Over the weekend, hundreds of protesters stormed Sri Lankan President Gotabaya Rajapaksa’s residence in Colombo, seized food supplies and requisitioned the building. Reports were released on July 13, claiming that President Rajapaksa had fled the country to the Maldives, hours before it was sent.

The economic collapse

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

In addition, the state imposed restrictions on the purchase of fuel, throwing 22 million people into the worst humanitarian crisis in 70 years. There is also a shortage of food and medicine in the country.

There could not be a better time to give citizens access to crypto so they can keep stack coins 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 in the day, the US was due to release its June CPI inflation data, which was expected to be worse than May at 8.8%.

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