I have been pushing an elephant up the stairs when it comes to developing a framework to attract foreign exchange to Sri Lanka by being ‘crypto friendly’. Below are my views on the recent public awareness message which was circulated by the Central Bank of Sri Lanka.
Daily News I 14th July 2022
Local cryptocurrency advocates have called on the Central Bank to create a regulatory framework to help bring about the mass adoption of the technology. l cryptocurrency advocate, bitcoins.lk maintainer, and blockchain entrepreneur Sanjay Mendis noted that it was unlikely that the recent announcement by the Central Bank would deter the existing activity in the market but rather just prevent the mass adoption of the revolutionary technology.
Mendis was speaking on July 12 in response to the recent Public Awareness statement by the Central Bank noting that the ‘CBSL has not given any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorized any Initial Coin Offerings (ICO), mining operations or Virtual Currency Exchanges.
Mendis noted that approximately 350,000 Sri Lankans have some form of cryptocurrency in their possession. He further added that since COVID-19 (April 2020 and April 2021) there had been over 750% growth stemming from the P2P platform Paxful.com alone from Sri Lanka which was before Binance launched the LKR trading pair.
Mendis believed that the country’s financial situation would be greatly improved if the Monetary Authority recognized and allowed people to hold digital assets as part of their investment portfolios.
He suggested that a regulated space would encourage local holders to register and interact with their assets with domestic firms which would bring in economic activity and be a considerable quick boost to the reserve position of the country. Mendis further opined that a regulatory framework would only act to protect consumers from bad practices in the currently unregulated space.
He was of the view that as the recent statement by the Central Bank mirrored statements that had been a few years ago it was more likely that the Monetary Authority was protecting itself from the duty to protect depositors.
Mendis noted that regulation would bring about much-needed Anti Money Laundering and Know Your Customer mechanisms into the current ecosystem. He further said that by being early to adopt crypto regulation the country would benefit from an ecosystem of auxiliary services.
Mendis, as one of the pioneers of the internet industry in the country, noted that there are over 40,000 gig workers in Sri Lanka who could transact more cheaply in cryptocurrency than waiting for PayPal when dealing with the outside world driving much-needed inward remittances.
Mendis likened policy discourse on the regulation of bitcoin to regulation on the internet.
Highlighting the success story of El Salvador where tourism rose by 30% following the acceptance of Bitcoin.