Although the economy of Sri Lanka is in tatters, the country’s central bank warns its citizens against using cryptocurrencies. Due to the unregulated nature of digital coins, the Sri Lankan bank has developed a particular disliking for cryptocurrency. The bank also said that they do not consider crypto as legal tender and have not given any entity to operate in the country.
Sri Lanka central bank on cryptocurrencies
The Central Bank recently reiterated the statements that it made on crypto in 2018 and 2021. Even then, the bank made it clear that it does not allow Initial Coin Offerings, mining operations, or any exchange operating in Sri Lanka. Since they are “unregulated financial instruments” and no authority has any oversight over digital currencies to safeguard users. The Central Bank has also made it clear that credit and debit cards shall not be used for payments related to cryptocurrency transactions in any way. According to the Sri Lanka’s central bank, there are many possible risks like financial, operational, security, and legal when investing in Virtual Currencies.
The economic crisis in Sri Lanka
If a stable economic country doesn’t want its citizens to use cryptocurrencies, it still makes sense. However, if you think about a country like Sri Lanka, where inflation touched around 54.6%, citizens do not have any other option rather then buying assets that hold their value. The interest rates in the country have also reached sky-high at 15.5%. Even if you take the recent volatility of the crypto market into consideration, we should still note that the current crisis of Sri Lankan economy is facing is much larger.
Many surveys and reports have shown that in countries where the economy is poor, and inflation is high, the adoption rate of crypto is also good. This is why smaller countries are ahead in terms of the use of cryptocurrencies. This is why even if Sri Lanka’s citizens might not buy Bitcoin, Ethereum, or some other utility coin, they are turning towards stablecoins just to preserve the value of their money.
What are your thoughts as Sri Lanka warns its citizens against using cryptocurrencies despite their current economic crisis? And do you think that crypto can help citizens get ahead of these economic problems? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: KuCoin CEO turns down rumors about massive layoffs.
