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- Sri Lanka’s Central bank has warned its residents regarding the risks associated with investing in cryptocurrencies
- The government has raised concerns and flagged three activities related to digital currencies
- Although the bank is unlike to accept decentralized cryptos, it is researching the blockchain technology
Sri Lanka’s central bank is warning their residents against the risks associated with cryptocurrency investments. The bank flagged four chief concerns and three crypto-related activities in a notice on Friday. With all this, the Central Bank of Sri Lanka has only one desire, that is to expose the investors to significant risks and warn them. Although the bank is worried regarding investments in cryptos, it is researching blockchain technology.
What are the concerns of Sri Lanka’s central bank?
Following the current scenario in the cryptocurrency market, Sri Lankan central bank began to warn the investors. The bank raised four concerns regarding investments in digital currency. The concerns also included the lack of legal recourse in the event of investor disputes. On the other side, few possibilities of violating the foreign exchange regulations are observed by the bank. As the users are purchasing the crypto-coins from abroad.
The bank mentioned that as the digital currencies are being traded as assets in digital assets exchanges from abroad, it would lead to a violation of the country’s regulations. However, such a statement came as digital currency is not identified as a permitted investment category in terms of the Foreign Exchange Act No. 12 of 2017 (FEA).
What has three crypto activities been flagged by the country?
According to the public notice shared by the Central Bank of Sri Lanka, three types of activities have been flagged. The three activities include crypto mining, investments in initial coin offerings (ICO), and trading through digital assets exchanges. Following the current scenario, where there are no regulatory safeguards in Sri Lanka for cryptocurrency activities, the country warned its public to avoid risks.
Blockchain technology is being studied in the country
Following the stances of Sri Lanka’s bank, it seems like the bank is willing to understand the technology first. However, the country is not too fond of crypto and decentralized system. Sri Lanka’s bank is still studying blockchain technology. However, it is expected that the technology could help Sri Lanka to improve their KYC data management part.
