April, 9, 2021
Considering the recent inquiries on virtual currency usage in the international and domestic markets, the Central Bank of Sri Lanka (CBSL) wishes to inform the public of the risks associated with investing in Virtual Currencies.
“Virtual Currencies (VCs)” are digital tokens created by private entities that can be obtained online through mining, Initial Coin Offerings (ICOs) or through Virtual Currency Exchanges. VCs are also commonly referred to as cryptocurrencies. Popular 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.
There are no regulatory safeguards relating to the usage, investment or dealing in VCs in Sri Lanka. Therefore, investing or using VCs in Sri Lanka poses significant risks such as;
The public is therefore warned of the significant financial, operational, legal, customer protection and security related risks posed by investments in VCs to the users as well as to the economy. The public is also informed that 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 ICOs, mining operations or Virtual Currency Exchanges.