Sri Lanka’s central bank has issued a warning about “the significant risks associated with using and investing in cryptocurrencies.” The central bank reminded the public that “cryptocurrencies are unregulated investment vehicles that are not recognized as an asset class in Sri Lanka.”
Sri Lanka Crypto Warning
The Central Bank of Sri Lanka (CBSL) issued an advisory last week, warning the public of “the significant risks associated with using and investing in cryptocurrencies.”
Sri Lanka’s Monetary Authority explained that it recently received complaints showing that “members of the public have incurred heavy losses on their cryptocurrency investments and, in certain cases, have also been subjected to financial scams carried out through cryptocurrency-related schemes.” .
Referencing its previous warnings from 2018 to 2022 about the financial, operational, legal and security risks related to cryptocurrencies, the central bank stated: “These risks and concerns have already materialized with the recent bankruptcies of several global institutions involved in cryptocurrency businesses, and the collapse and loss of value of some cryptocurrencies”, emphasizing:
The public is reminded that cryptocurrencies are unregulated investment vehicles that are not recognized as an asset class in Sri Lanka. Furthermore, cryptocurrencies are not considered legal tender in Sri Lanka and have no regulatory safeguards related to their use in the country.
On March 18, 2021, the central bank issued a set of regulations restricting the use of Electronic Funds Transfer Cards (EFTCs), including debit and credit cards, for payments related to virtual currency transactions. The CBSL warned that cryptocurrencies operate through informal channels, not contributing to the national economy and presenting the risk of losing valuable currency to the country.
In addition, the central bank warned of the growing number of financial scams that promise high returns on cryptocurrency investments. “These scams include tricking people out of money with the promise of providing a high return on investing money in cryptocurrency, as well as tricking people into investing in fraudulent cryptocurrency projects. Such scams bypass traditional legal and regulatory protection mechanisms, causing people to lose their hard-earned money,” the CBSL described.
The central bank continued:
The public is also notified that CBSL has not issued any license or authorized any individual or company to operate schemes involving cryptocurrency.
In addition, the CBSL emphasized that it “has not authorized any initial coin offering (ICO) or any variant thereof, cryptocurrency mining operations, cryptocurrency exchanges, cryptocurrency-related depository or custody services, or any investment advisory services.” in cryptocurrencies”.
The notice concludes with the CBSL urging “those engaged in promoting and facilitating the promotion of cryptocurrency investment and trading to refrain from such activities, considering the wide range of risks associated with cryptocurrencies and the resulting difficulties for the public.” , including financial losses”. .”
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