The nation of Sri Lanka is warning citizens and telling them to avoid using or trading digital currencies whenever possible.
Sri Lanka Appears to Be Very Anti-Crypto
The warning comes at a moment when the whole world seems to be rethinking its attitude towards crypto. At the time of writing, the digital currency space is experiencing a period of suffering unlike any other. Bitcoin, for example, the world’s number one digital currency by market cap, has lost more than 70 percent of its value since the beginning of November.
During that period, the currency was trading for a new all-time high of approximately $68,000, though it has since fallen to about $20K, and it’s struggling to maintain this position. The digital currency arena has also lost more than $2 trillion in overall valuation.
The Central Bank of Sri Lanka – also known as CBSL – said in a recent memorandum that it does not consider digital currencies legal tender. Thus, they cannot be utilized to make payments for goods and services, and the country does not recognize these assets as official money. In addition, regulators of Sri Lanka said that they have not issued any financial licenses to crypto exchanges or similar businesses to operate within the country’s borders.
Sri Lanka says that the entire crypto space is “largely unregulated,” and that traders need to exercise extreme caution when getting involved with assets like bitcoin and Ethereum. The bank explained the following on its website:
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.
This is not the first time Sri Lanka has warned against crypto use. Similar statements came in the years 2018 and 2021, two periods that couldn’t have been more different from each other. 2018 saw the crypto space experiencing some of its most bearish conditions, with bitcoin falling to about $3,500 per unit in November of that year after trading at nearly $20K just 11 months prior.
It’s the Opposite of El Salvador
2021, by contrast, is often referred to as the “year of crypto,” in which prices were rising through the roof and the space was looking better and stronger than it ever had before. More crypto businesses were entering the fray, and the valuation of the space was on the verge of exceeding $3 trillion.
Sri Lanka is taking the opposite approach of countries like El Salvador, which was the first nation in history to declare bitcoin legal tender. The Central American nation has long sought to relieve itself of its dependence on the U.S. dollar, and leaders felt BTC was the perfect tool to make this happen.