Central Bank issues fresh advisory on virtual currencies

Considering the recent developments in relation to virtual currency usage in the international and domestic markets as well as the inquiries related to virtual currency, the Central Bank of Sri Lanka (CBSL) has issued a fresh advisory to the public. 

It said 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 authorisation to any entity or company to operate schemes involving VCs, 

including cryptocurrencies, and has not authorised 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 as 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,” the CBSL statement added.