As per the latest reports, the Central Bank of Sri Lanka has issued a warning for its locals who are interested to invest in cryptocurrencies. According to the analysts, the Central Bank of Sri Lanka has chosen the right time to intimate and warn all its locals about investing in cryptocurrencies.
Since the beginning of 2021, the entire cryptocurrency industry is experiencing a bullish run. No matter the cryptocurrency, it is constantly experiencing a surge in terms of its price, adoption, and market capitalization.
The majority of the new investors joining the crypto platform are trying to invest in these major currencies. However, these cryptocurrencies are highly volatile and have the tendency to plunge at any given time. One of the major arguments around cryptocurrencies is that they have no physical value against which they can be measured.
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This is exactly what the Central Bank of Sri Lanka has considered before it released a notice for all the locals in the country. The regulator wants to remind people about the risks involved in investing in cryptocurrencies.
Similar to central banks from around the world, the Central Bank of Sri Lanka has also highlighted the volatility, value, and decentralized nature of cryptocurrencies.
The intimation notice on cryptocurrency investments was issued by the Central Bank of Sri Lanka on Friday, April 9, 2021. In the notice, the CBSL has re-iterated its locals about three major activities going on with cryptocurrencies.
The Central Bank of Sri Lanka has talked about trading, investments in initial coin offerings (ICO), and cryptocurrency mining. According to the Central Bank of Sri Lanka, by getting into either of the activities, the users/investors put their investments and finances at risk.
The Central Bank of Sri Lanka also shared its concern over the decentralized and unregulated nature of the cryptocurrency platform. The regulator warned Sri Lankans that losing funds to decentralized platforms and recovering them is close to impossible.
Therefore, investing in cryptocurrencies is full of risks only and poses a threat to the economic and financial condition of the country.
To make its citizens understand the risks involved in crypto investments, the CBSL has highlighted four major areas of concern for better understanding.
The first major concern is undoubtedly the unregulated nature of the cryptocurrency industry. The second major concern is the high volatility of the cryptocurrency market.
The third major concern is the extreme possibilities of cryptocurrencies being used for money laundering, terrorist funding, or other illegal/criminal activities.
The fourth major concern is the potential violation of the Foreign Exchange Act that is currently being practiced in the country.