Sri Lanka’s central bank has taken the 2021 crypto bull marketplace as an opportune time to warn the public against the risks related to cryptocurrency investments.
In a public understand printed on Friday, the Central Bank of Sri Lanka flagged 3 sorts of crypto actions: cryptocurrency mining, investment in preliminary coin choices and buying and selling by means of cryptocurrency exchanges. All those, the CBSL warns, divulge buyers to vital risks. As there are not any regulatory safeguards in position for crypto actions in Sri Lanka, the establishment has known 4 major spaces of worry for retail buyers entering cryptocurrency.
The first comes to the shortage of any explicit felony or regulatory recourse for buyers within the case of problems or disputes associated with their investments. Second, a extensive mistrust of the prime volatility of cryptocurrency price has led the bank to warn investors against their publicity to probably huge monetary losses.
Third, the CBSL asserts that there’s a prime chance of cryptocurrencies being related to felony actions, together with terrorism financing and cash laundering. Sri Lanka has, in recent times, been identified by means of the Financial Action Task Force for its efforts to crack down on cash laundering risks and secured its delisting from a so-called “grey list” of problematic jurisdictions.
The ultimate caution, explicit to foreign currency echange rules in Sri Lanka, includes investors’ possible violation of the rustic’s Foreign Exchange Act. The bank states:
“As VCs are traded as assets in Exchanges, purchasing VCs from abroad would lead to a violation of Foreign Exchange Regulations, as VCs are not identified as a permitted investment category in terms of the Foreign Exchange Act No. 12 of 2017 (FEA). Electronic Fund Transfer Cards (EFTCs) such as debit cards and credit cards are also not permitted to be used for payments in foreign currency related to virtual currency transactions, in terms of the Foreign Exchange Regulations in Sri Lanka.”
As in the past reported, whilst the CBSL could also be cautious of decentralized cryptocurrencies, it has however initiated a countrywide venture to check its underlying generation, blockchain, for its possible to reinforce Know Your Customer knowledge sharing and control.