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Utilization of Virtual Currencies in Sri Lanka: A Caution from the CBSL

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The Central Bank of Sri Lanka has issued a statement to educate the public on the use of virtual currencies in Sri Lanka.

The bank stated that the statement was issued after taking into account recent developments regarding the use of virtual currencies on international and domestic markets, as well as inquiries pertaining to virtual currencies.

Full statement:

Virtual Currencies (VCs) are largely unregulated digital representations of value that are issued by private entities and can be electronically traded.

As informed to the public previously by CBSL through press releases in 2018 and 2021, CBSL has not given any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorized any Initial Coin Offerings (ICO), mining operations or Virtual Currency Exchanges.

Furthermore, as per the Directions, No. 03 of 2021 under Foreign Exchange Act, No. 12 of 2017 issued by the Department of Foreign Exchange of CBSL, 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.

Therefore, VCs 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. The public is also warned not to fall prey to various types of VC schemes offered through the Internet as well as other forms of media.

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