August 4, 2021

Central Bank Issues Stark Warning on Crypto Investments

2 min read

The Central Bank (CB) issued a stark warning on Crypto investmets, streessing that citizens who purchase crypto from exchanges outside the country are in violations of the country’s Foreign Exchange Regulations.

“Popular Virtual Currencies (VCs) include Bitcoin, Ethereum, Litecoin. While VCs have their own value denominations such as bitcoins for Bitcoin and ethers for Ethereum, they are usually valued in VC Exchanges in currencies issued by Central Banks, e.g., US dollar (USD), Japanese Yen, etc. However, it is important to note that VCs are not issued by Central Banks and are also not generally backed by underlying assets. Therefore, their values are determined by speculation of the public on VC Exchanges,” the Bank said in a statement.

It highlighted that such investments by the country’s citizens also violate the Foreign Exchange Regulations.

” 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,” it noted.

The CB reiratted that it has not granted any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorized any ICOs, mining operations or Virtual Currency Exchanges. 

However, the CB didn’t specify details of any move to pursue legal actions against the citizens who invest in or engage in mining Cryptos.

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