Sri Lanka has formed a panel to recommend a regulatory framework covering the growth of digital banking, blockchain and cryptocurrency mining, the government has announced.
Fast facts
- Developing an integrated system of digital banking, blockchain and cryptocurrency mining is crucial for Sri Lanka to keep up with its regional neighbors while expanding international trade, the government-issued press release said. A newly formed committee will study the regulations and initiatives of other countries including Dubai, Malaysia, the Philippines, the European Union and Singapore, to recommend suitable regulations in Sri Lanka.
- The panel will also examine laws and regulations relating to anti-money laundering, terrorism financing, criminal activities and know-your-customer policies. The proposal for the committee was introduced by the minister of project coordinating and monitoring, Namal Rajapaksa, and the panel will submit its report to the Cabinet of Acts, Rules and Regulations.
- The committee consists of members from fintech institutions including PricewaterhouseCoopers’ Sujeewa Mudalige and Mastercard’s Sandun Hapugoda and representatives of the Central Bank of Sri Lanka and the Colombo Stock Exchange.
- The announcement comes after the central bank warned the public against the risks of investing in cryptocurrencies in April. The central bank had four major concerns that could put crypto investors at risk: the lack of legal recourse since cryptocurrencies are unregulated in the country; highly volatile crypto prices that could lead to large financial losses; the potential use of crypto for criminal activities; and the potential violation of the country’s Foreign Exchange Act.
- According to a recent report from blockchain analysis firm Chainalysis, Central and Southeast Asia have emerged as among the world’s fastest crypto adopters. Sri Lanka, an island nation south of India, has lagged behind other Asian countries in terms of cryptocurrency adoption. It did not rank on Chainalysis’ global crypto adoption index 2021 and currently has only one company that accepts cryptocurrency for payments. A major Sri Lankan ecommerce player Kapruka.com is set to become the second after it announced last week that it will soon start accepting payments in cryptocurrencies.