Sri Lanka's central bank (CBSL) has warned the public on the use of cryptocurrencies, which, it said, could fall foul of anti-money laundering laws, EconomyNext reports.
"Due to the absence of a centralized authority such as a Central Bank to guarantee the value of the currency and regulate transactions, there is no recourse in the event of any user or transaction related issues or disputes," the bank said.
The central bank noted that the value of virtual currencies is dependent on speculation and is not backed by an underlying asset or a regulatory framework, which leads to “major volatility.”
The regulator also said virtual currencies may be used for illegal activities. Besides, it added “their usage could amount to breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.”
"Therefore, cryptocurrencies, in the present form, may pose significant risks in terms of financial, operational, legal, customer protection and security related risks to their users as well as to the economy."
Thereby, the bank notified the public that it has not given licence or authorization to any entity or company to operate schemes involving virtual currencies, including cryptocurrencies, and has not authorized any Initial Coin Offerings (ICOs)."
By Jade Olafson