The Central Bank of Sri Lanka has published a warning notice about the risks associated with cryptocurrency as interest and trading volumes of bitcoin and other cryptocurrencies surge locally and globally.
Sri Lanka’s Central Bank Warns About Bitcoin
The Central Bank of Sri Lanka has published a notice regarding cryptocurrency. “Considering the recent inquiries on virtual currency usage in the international and domestic markets, the Central Bank of Sri Lanka (CBSL) wishes to inform the public of the risks associated with investing in virtual currencies,” the notice published Friday reads.
In describing what cryptocurrency is, the central bank explained that virtual currencies (VCs) “are also commonly referred to as cryptocurrencies,” noting that popular ones include bitcoin, ethereum, and litecoin. The Sri Lankan monetary authority cautioned:
There are no regulatory safeguards relating to the usage, investment or dealing in VCs in Sri Lanka. Therefore, investing or using VCs in Sri Lanka poses significant risks.
The central bank then highlighted some risks it sees as being associated with cryptocurrencies. The first is that “Users/investors will have no regulatory or specific legal recourse in the event of any user or transaction related issues or disputes.”
Next, the central bank says cryptocurrencies are highly volatile “as it is dependent on speculation,” and investors face “a risk of making large losses.” Furthermore, the monetary authority asserted that there is a “High likelihood of VCs being associated in financing terrorist activities and used by criminals to launder criminal proceeds.”
The Sri Lankan central bank also pointed out the potential “Violation of Foreign Exchange Regulations.” It detailed that as cryptocurrencies are traded as assets in exchanges, purchasing them from abroad would lead to a violation of Foreign Exchange Regulations, as they are not identified as a permitted…