Sri Lanka Reiterates Crypto Warning as President Flees Amid Civil Uprising

July 14, 2022, 11:15 AM AEST - 4 weeks ago

Sri Lanka is in the throes of mass protests over an economic crisis that this week saw its President, Gotabaya Rajapaksa, flee the country on a military jet.

Simultaneously,  the Central Bank of Sri Lanka (CBSL) has warned the public against crypto purchases due to the industry’s regulation drought.

The CBSL issued a short media release to remind the public that, amid the country’s economic collapse, virtual currencies (VCs) remain “largely unregulated digital representations of value that are issued by private entities and can be electronically traded”.

Inflation Hits 54%, Interest Rates 15.5%

With Sri Lanka’s inflation level topping 54 percent last month, the CBSL raised interest rates to 15.5 percent with an immense knock-on effect on the cost of living for the country’s 22 million population.

[Digital currencies] are considered unregulated financial instruments and have no regulatory oversight or safeguards relating to their usage in Sri Lanka … The public is therefore warned of the possible exposure to significant financial, operational, legal and security-related risks as well as customer protection concerns posed to the users by investments in VCs.

Central Bank of Sri Lanka

On July 9, hundreds of protesters breached the president’s Colombo residence, reportedly seizing 17.8 million rupees (approximately US$50,000) in cash and fully utilising all facilities in the residence.

As the situation in Sri Lanka continues to spiral, CBSL’s media release also warned the public to be wary of various VC schemes and scams offered through all forms of media.

Crypto Opposition Around the Globe

Several other nations around the world also remain anti-crypto, notably Russia and Zambia. The Central Bank of the Russian Federation (CBR) was seeking to ban crypto investments in late 2021, according to a report by Reuters. The CBR also barred mutual funds from investing in digital currency during this same period.

More recently, Zambia’s central bank was revealed to be in the process of researching central bank digital currencies, with aspirations to implement a CBDC by the end of the fourth quarter. This followed government-issued warnings about crypto earlier in the year. Despite wanting to explore CBDCs, the Zambian government maintains an anti-crypto stance.

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