As the world continues to embrace digital currencies, Sri Lanka is not left behind. The country’s stance on cryptocurrency and the impending launch of ‘Lanka Pay’ is a testament to its commitment to digital transformation. This article explores Sri Lanka’s position on cryptocurrency and the potential impact of the ‘Lanka Pay’ system on the country’s financial landscape.
Sri Lanka’s Stance on Cryptocurrency
Despite the global surge in cryptocurrency adoption, Sri Lanka has maintained a cautious approach. The Central Bank of Sri Lanka (CBSL) has not officially recognized cryptocurrencies as legal tender. In 2018, the CBSL issued a warning to the public about the risks associated with cryptocurrencies, citing concerns about their lack of central authority, potential for use in illegal activities, and high price volatility.
However, this does not mean that the country is entirely closed off to the idea of digital currencies. The CBSL has shown interest in blockchain technology, the underlying technology behind cryptocurrencies. In 2020, the bank advertised for tech companies to develop a proof-of-concept (PoC) for a shared Know-Your-Customer (KYC) facility using blockchain technology. This move indicates a willingness to explore the potential benefits of blockchain and, by extension, digital currencies.
The Future Launch of ‘Lanka Pay’
In a bid to digitize the country’s financial system, the CBSL is set to launch ‘Lanka Pay’, a national payment platform. This platform aims to provide a secure, efficient, and affordable digital payment infrastructure that will facilitate real-time payments across the country.
‘Lanka Pay’ is expected to revolutionize the way Sri Lankans conduct financial transactions. It will enable instant fund transfers, bill payments, and mobile wallet services, among other features. The platform will also support cross-border transactions, making it easier for Sri Lankans living abroad to send money home.
Implications of ‘Lanka Pay’ for Cryptocurrency
While ‘Lanka Pay’ is not a cryptocurrency, its launch could have significant implications for the future of digital currencies in Sri Lanka. Here are a few potential outcomes:
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‘Lanka Pay’ could pave the way for a Central Bank Digital Currency (CBDC). As the CBSL gains experience in managing a digital payment platform, it may become more open to the idea of issuing a CBDC. This would be a significant step towards the acceptance of digital currencies in the country.
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The platform could facilitate cryptocurrency transactions. If ‘Lanka Pay’ were to integrate with cryptocurrency exchanges, it could provide a secure and efficient infrastructure for buying and selling cryptocurrencies. This would make it easier for Sri Lankans to participate in the global cryptocurrency market.
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‘Lanka Pay’ could increase public awareness and acceptance of digital currencies. As Sri Lankans become more comfortable with digital payments, they may also become more open to the idea of cryptocurrencies.
Conclusion
While Sri Lanka’s stance on cryptocurrency remains cautious, the impending launch of ‘Lanka Pay’ could mark a turning point. This digital payment platform could pave the way for greater acceptance of digital currencies in the country. Whether or not this will lead to the recognition of cryptocurrencies as legal tender remains to be seen. However, one thing is clear: Sri Lanka is taking significant strides towards digital transformation, and digital currencies are likely to play a role in this journey.
