In a press release on July 12, the CBSL maintained that cryptocurrencies are outlawed while noting that it has not approved any Initial Coin Offerings (ICO), mining operations or crypto exchange services. The institution added that cryptocurrency payments are also outlawed and banned in the country. According to the CBSL, digital currencies lack regulatory oversight hence they cannot be used.
Sri Lanka’s collapsing economy
In recent months Sri Lanka’s economy has deteriorated coupled with soaring inflation that hit 54% in June with the central bank raising interest rates to 15%. Consequently, residents resorted to massive protests calling for the resignation of the government. Amid the economic turmoil, cryptocurrencies are viewed as a possible solution with various players fronting different ideas on how to save the country. For instance, Tron founder Justin Sun stated that he can leverage Web3 to help the country get out of bankruptcy. Ironically, in 2018, Sri Lanka’s Prime Minister Ranil Wickremesinghe had detailed how the government plans to make the country rich by 2025. Despite the government maintaining a hard stance on cryptocurrencies, some residents resorted to investing in digital currencies as a cushion against the economic crisis. Most residents opted to convert their savings into dollar-pegged stablecoins amid the deteriorating local currency. Last year, increased interest in cryptocurrencies saw the CBSL publish another warning highlighting the risks associated with the sector. With most residents desperate, cryptocurrency scams have also emerged aiming to defraud investors.
