October 22, 2021

Sri Lanka To Integrate Blockchain Into Their Digital Economy

Sri Lanka is planning to digitize the economy via digital banking and blockchain technology. The country has approved a policy based on blockchain technology and its applications.  Namal Rajapaksa, Cabinet Minister of Sri Lanka, expressed his view on Twitter about the importance of regulatory framework. He is of the opinion that an innovative and effective regulation could help the country build its digital economy. 

Role Of Cryptocurrency And Blockchain In Digital Economy 

This forward-thinking approach to digital economy is characteristic of a number of Sri Lanka’s officials. The Minister of Youth and Sports, Namal Rajapaska, is one person that is open to the role of cryptocurrency and blockchain in the country. He claimed that he is part of an ongoing discussion on ways to integrate blockchain and cryptocurrency into the larger digital economy.

Rajapaska is taking steps towards instituting a committee that will create crypto and blockchain policies and also institute plans for training youth on crypto and blockchain. He hopes that the cryptocurrency industry can attract foreign investors into the country, which will create employment opportunities for youth and the country at large. 

Sri Lanka is one of the countries that are implementing cryptocurrency friendly policies. There are perceived benefits of having cryptocurrency friendly policies such as increased foreign investment, growth in related industries such as e-commerce, etc. These benefits are fuelling this cryptocurrency friendly policies by the country.

Sri Lanka is also looking towards generating more renewable energy, this is important because one of the biggest arguments against cryptocurrency is its deleterious effect on the environment. Bitcoin mining has been estimated to contribute about 0.9% of the global warming and other cryptocurrencies also contribute due to the power needed to mine these cryptocurrencies. Hence, generating renewable energy will allow the country to engage in cryptocurrency mining while still being safe for the environment.

Improving Cryptocurrency Regulations 

While the country is taking steps towards creating regulations that enables cryptocurrency and blockchain technology, this is a more recent development. The Central Bank of Sri Lanka had denied giving any authorization to companies for running crypto-schemes. This is because there is absence of regulatory safeguards with regard to digital currency. Hence, the Central Bank refused authorization for any entity to operate ICOs, exchanges, and mining. 

However, with the recent development in regulatory framework regarding cryptocurrency and blockchain technology, and the country’s aim of attracting foreign investment, one can expect more authorization to be given to cryptocurrency companies to operate in Sri Lanka under appropriate regulations.

The Central Bank has taken steps in the past to incorporate blockchain technology in its banking sector. And to do this, the Central Bank shortlisted some software firms to develop ways for the country to achieve integration of blockchain into banking sector.