Sri Lanka to adopt crypto? Committee formed to study regulations and rules
- Panel to study regulations and rules applicable to blockchain, digital banking, and crypto mining
- Decision reflects an effort to attract foreign investment in this technology
- More and more people are registering on peer-to-peer crypto trading platforms in Sri Lanka
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The panel’s mandate will include exploring KYC processes, digital banking, blockchain for attracting investments, terrorism financing, and anti-money laundering.
The government of Sri Lanka approved the formation of a panel to study the regulations and rules applicable to blockchain, digital banking, and crypto mining in other countries. They will also explore the risk of criminal activities. The five-member committee will study crypto regulatory frameworks of countries like Malaysia, Dubai, and Singapore.
On Thursday, the Sri Lanka Department of Government Information issued a press release, stating that the decision was an effort to attract foreign investment in technology. Sri Lanka is trying to modernize its economy against the backdrop of severe turmoil. The release states:
The necessity of developing an integrated system of digital banking, blockchain, and cryptocurrency mining has been identified to pace on par with the global partners in the region while expanding trade to the international markets.
Economic turmoil driving crypto trade up
So far, the crypto industry has not been subject to any regulation in Sri Lanka. It’s hard for interested parties to buy crypto because foreign currency exchange laws prohibit paying for virtual assets with credit cards.
Despite that fact, more and more people are registering on peer-to-peer (P2P) crypto trading platforms in Sri Lanka. There is growing interest in private social media groups, through which you can buy crypto.
For example, Paxful, a local P2P Bitcoin (BTC/USD) trading platform, recorded trading volume growth of 730% in April 2021 y/y. The volume in the first quarter of this year surpassed that achieved in the whole of 2020. Similar tendencies are observed in Brazil and Morocco.
Central bank warns against crypto investments again
Even the Central Bank of Sri Lanka didn’t miss the ballooning interest in crypto. Earlier this year, they issued a warning about the risks involved in digital currency investments. This has been the second alert in three years:
There are no regulatory safeguards relating to the usage, investment or dealing in [virtual currencies] in Sri Lanka. Therefore, investing or using [virtual currencies] in Sri Lanka poses significant risks.
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