The Central Bank of Sri Lanka has issued a public warning about the risks associated with virtual currencies, as well as the potential exposure of consumers to significant financial, operational, legal, and security risks.
CBSL states in a statement that, despite recent developments in virtual currency usage in international and domestic markets, as well as inquiries about virtual currency, they remain largely unregulated digital representations of value issued by private entities and can be electronically traded.
CBSL has previously informed the public through press releases in 2018 and 2021 that it has not granted any licence or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorised any Initial Coin Offerings (ICO), mining operations, or Virtual Currency Exchanges.
Furthermore, according to Directions No. 03 of 2021 issued by the Department of Foreign Exchange of CBSL under the Foreign Exchange Act, No. 12 of 2017, Electronic Fund Transfer Cards (EFTCs) such as debit cards and credit cards are not permitted to be used for payments related to virtual currency transactions.
As a result, VCs are considered unregulated financial instruments in Sri Lanka, with no regulatory oversight or safeguards in place.
The public is thus warned of the potential exposure to significant financial, operational, legal, and security risks, as well as customer protection concerns, posed by VC investments. The public is also warned not to fall victim to various types of VC schemes promoted via the Internet and other forms of media.
