The Governor of the Central Bank of Sri Lanka has expressed concern over the use of cryptocurrencies by investors and the lack of clear rules to regulate digital assets.

Nandalal Weerasinghe said there are ongoing discussions within the country about the benefits and risks of cryptocurrencies, as well as debates about the most effective means of regulation. Yes, in some jurisdictions cryptocurrencies are already recognized as a separate class of assets, but they are characterized by too high volatility, the official complains.

“Cryptocurrencies are very risky and lack proper regulation and oversight from our government. So do we need the citizens of the country to invest in overly volatile assets?” — the head of the Central Bank asked himself.

The Governor of the Central Bank emphasized that the government has the final say on the permission/prohibition of cryptocurrencies in the country. Earlier, Sri Lankan President Ranil Wickremesinghe said that cryptocurrencies are in particular demand among young people, who demand that officials weaken regulation of the industry for the sake of economic development. However, Weerasinghe believes that oversight of the crypto industry should be strict, and the powers should be taken over by the Securities and Exchange Commission of Sri Lanka (SEC). This will ensure market transparency and prevent money laundering through cryptocurrencies, the official is confident.

At the beginning of the year, the Central Bank of Sri Lanka expressed its readiness to explore the possibility of launching its own digital currency (CBDC). The introduction of a government stablecoin should improve citizens' access to banking services and provide an alternative to cash.