Sri Lanka’s central bank says crypto remains banned despite the economic crisis

In the midst of the continuing financial instability in Sri Lanka, which has caused the government to run out of currency, cryptocurrencies have been proposed as a potential means of rescuing the nation.

The Central Bank of Sri Lanka (CBSL) has stated, however, that there is no authorization to launch various crypto goods.

In a press statement dated July 12, the CBSL said that cryptocurrencies are illegal and noted that it has not authorised any Initial Coin Offerings (ICOs), mining activities, or crypto exchange services.

The agency noted that bitcoin transactions are likewise illegal and prohibited in the nation. According to the CBSL, digital currencies are unusable because they lack regulatory control.

“The public is consequently reminded that investments in virtual currencies may expose users to considerable financial, operational, legal, and security-related risks, as well as consumer protection problems” (VCs). 

Sri Lanka’s sinking economy

Sri Lanka’s economy has worsened in recent months with skyrocketing inflation, which reached 54 percent in June and prompted the central bank to raise interest rates to 15 percent. As a result, locals engaged in enormous rallies demanding the government’s resignation.

In the midst of economic upheaval, cryptocurrencies are considered as a potential solution, with numerous people proposing various plans to rescue the nation. For instance, the inventor of Tron, Justin Sun, suggested that he may use Web3 to assist the nation in escaping bankruptcy.

Ironically, in 2018, Ranil Wickremesinghe, the prime minister of Sri Lanka, outlined the government’s ambitions to make the nation prosperous by 2025.

Despite the government’s strong stance on cryptocurrencies, some citizens have turned to digital currency investments as a hedge against the economic crisis. In response to the depreciating local currency, the majority of inhabitants converted their savings to stablecoins tied to the dollar.

In response to the rising interest in cryptocurrencies in 2017, the CBSL issued a new warning stressing the potential dangers. As a result of the desperation of the majority of citizens, cryptocurrency frauds have evolved with the intent of defrauding investors.

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