Be aware of virtual currencies
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Be aware of virtual currencies

Be aware of virtual currencies

The central bank has warned Sri Lankan’s to be aware that virtual currencies have no legal guarantees. Several virtual curancies are in circulation. Bitcoin, Ethereum, Litecoin are popular bitcoins.

 

These digital tokens created by private entities that can be obtained online. The bit coins are valued in currencies issued by Central Banks, e.g., US dollar (USD), Japanese Yen, etc. However, it is important to note that virtual currencies are not issued by Central Banks and are also not generally backed by underlying assets.

 

The Central Bank has informed the public of the risks associated with investing in Virtual Currencies. According to the Central Bank the following are among the risks faced by  virtual currency users.
 
a) Users/investors will have no regulatory or specific legal recourse in the event of any user or transaction related issues or disputes.
b) High volatility of the value of the VCs, as it is dependent on speculation, exposing the investment of VCs to a risk of making large losses.
c) High Likelihood of VCs being associated in financing terrorist activities and used by criminals to launder criminal proceeds.
d) Violation of 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.
The public is also informed that Central Bank has not given any license or authorization to any entity or company to operate schemes Virtual Currency Exchanges.

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