Illicit crypto currency transactions raise uncertainty
Sri Lankan investments in crypto currencies have been increasing in recent times leading to financial insecurities in the country, the Committee on Public Finance (COPF) warned this week.
The public is reminded that crypto currencies are unregulated investment instruments which are not recognised as an asset-class in Sri Lanka.
COPF chairman Dr. Harsha de Silva inquired whether the officials were aware of instances where Sri Lankans were converting their rupees to USDT (crypto currency) through various platforms such as Binance and subsequently transferring funds abroad or investing in crypto currencies.
The existing issue in the Sri Lankan crypto market is hidden behind the issues that have been clearly seen which emphasise the need of a regulatory framework which Sri Lanka is lacking at present, money market sources highlighted.
Notably, crypto currencies were recently recognised as an asset class by the US Securities and Exchange Commission, with the approval of Exchange-traded funds just last week.
In response to the COPF chairman’s queries, officials present at the meeting informed that they were unaware of such occurrences and assured that they would conduct a thorough study into the matter.
They emphasised that exchanging rupees into dollars outside formal channels is not permitted, and they will investigate the potential misuse of unofficial avenues for currency exchange and investment.
Under the Foreign Exchange Act, No. 12 of 2017 issued by the Department of Foreign Exchanges of Central Bank, Electronic Fund Transfer Cards (EFTC) are not allowed for payments with regard to crypto currency.
On the other hand, along with the increasing popularity of the crypto market in Sri Lanka, crypto-related illicit activities have raised financial insecurities in the country, a senior Finance Ministry official said.
The Central Bank recently banned nine pyramid schemes that have been operated in Sri Lanka.
Declaring a ban is a positive step towards ensuring the financial security of the country, but at the same time it needs to be addressed how the culprits will be charged while facilitating a way to how the defrauded money will be returned to the investors who invested in the certain fraudulent schemes, officials said.
The existing issue in the Sri Lankan crypto market is hidden behind the issues that have been clearly seen which emphasize the need of a regulatory framework which Sri Lanka is lacking at present.