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Sri Lanka gave a warning against the use of cryptocurrencies

Amid political and economic tensions in Sri Lanka, the country’s central bank, The Central Bank of Sri Lanka (CBSL), has warned against cryptocurrency transactions due to a lack of regulatory oversight.

This Tuesday, the CBSL stated that it had not authorized any company in Sri Lanka to offer services related to cryptocurrencies, including exchanges’ initial coin offerings (ICO) and crypto mining.

Sri Lanka’s central bank said the warning was in response to “recent developments in virtual currencies.” This is about the current crypto winter and the recent price volatility of the most popular cryptocurrencies, such as Bitcoin and Ethereum.

“Digital assets are considered unregulated financial instruments and are not overseen by regulators or safeguards in Sri Lanka. He vo8iced CBSL’s statement. “Therefore, citizens are warned of the potential exposure to significant financial, operational, legal and security risks, as well as client protection issues that investments with digital assets pose to users.”, he added.

On Saturday, thousands of protestors stormed the official residence of Sri Lankan President Gotabaya Rajapaksa, taking control of the building.

For this reason, the speaker of Parliament, Mahinda Yapa Abeywardena, announced that President Rajapaksa would officially step down this Wednesday, July 13.

Sri Lanka talked with the International Monetary Fund about a possible $3 billion bailout. However, due to the recent resignation of the President, it could be several months before a bailout package materializes.

“People say that the central bank struggled to maintain an artificial exchange rate peg. Many knew this would collapse and started converting their cash savings into stablecoins like USDT,” says Prashan Loganathan, a trader from the island nation.