The Central Bank of Sri Lanka says that cryptocurrencies are privately created, virtual currencies that are not controlled by any government financial authority.
These digital assets operate through modern methods such as cryptography and distributed ledger technology.
They cannot be used for everyday transactions like physical money, but are used for transactions carried out online.
As the Central Bank has observed, cryptocurrencies have become popular as a profitable investment opportunity. However, recent complaints indicate that such investments have resulted in large financial losses. In addition, there have been reports that cryptocurrencies have been used for fraudulent activities.
Although countries such as the US, UK and Japan have regulated cryptocurrencies to some extent, the Central Bank emphasizes that cryptocurrencies are not recognized as legal tender in Sri Lanka. Accordingly, cryptocurrencies are considered an unregulated investment instrument.
Furthermore, according to an order issued under the Foreign Exchange Act No. 12 of 2017, the use of debit and credit cards for cryptocurrency transactions is also prohibited. The Central Bank points out that cryptocurrencies do not contribute to the country’s economy and can also cause a loss of foreign exchange by adversely affecting the national financial system.
The official currency of Sri Lanka is the rupee and there is information that cryptocurrencies are widely used for illegal activities, Central Bank Governor Dr. Nandalal Weerasinghe has previously stated.
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