By Savithri Rodrigo
Colombo Sri Lanka (Commonwealth Union)_American billionaire and cryptocurrency evangelist Tim Draper who was in Sri Lanka to shoot an episode of his TV show ‘Meet the Drapers’ was suitably surprised when his idea of pitching cryptocurrencies to the economically challenged island nation was speedily rejected. Having already met President Ranil Wickremesinghe a day prior to persuade the adoption of cryptocurency as the panacea for the financial problems being faced by Sri Lanka, his next stop with the Governor of the Central Bank of Sri Lanka Dr Nandalal Weerasinghe met with a tough reception.
Rejecting the idea outright of using cryptocurrency, the Governor who has been having a more than challenging time to calm the financial mayhem the country has been facing since March 2022, was very clear with his answer. “We don’t accept,” he said, when Draper pronounced that he had come to the Central Bank with decentralized currency. The Bitcoin tie worn by Draper had little impact on the Governor, who also added, “Adoption of Bitcoin won’t be a reality in Sri Lanka ever. We don’t want to make the crisis worse by introducing Bitcoin.”
Draper tried several tactics of hard-hitting arguments and persuasion in equal turn, including cryptocurrency being the one solution to abate Sri Lanka’s reputation for corruption, averting graft by adopting Bitcoin, averring that Sri Lanka is known as corruption capital and Bitcoin being the answer. He even gave the example of El Salvador which adopted Bitcoin as legal tender and the tiny Pacific island Palau which made Draper the founding resident of its digital-residency programme.
Sri Lanka is debt-stricken no doubt but the Governor had other plans which have thus far been getting positive responses. International creditors were in talks for debt restructuring which would pave the way for the International Monetary Fund’s bailout and inflation has been steadily decreasing albeit still high. But the Governor is confident of pulling Sri Lanka out of the mire without the cryptocurrency panacea.
64 year old Draper was an early backer for companies like Tesla, Skype, Robinhood, Coinbase and Baidu Inc and purchased Bitcoin in 2014 at a US Marshals Service Auction. However, Bitcoin has not had the greatest run in 2022, one of the worst years on record. Standard Chartered Bank predicts Bitcoin could plunge even further to a dismal USD 5,000 this year, which is a 70 percent drop on its current valuation although Draper is bullish due to the cryptocurrency’s trait as a hedge against inflation. He predicts that Bitcoin will hit USD 250,000 by mid-2023.
The Governor’s aversion to Draper’s suggestion however is not new. The Central Bank has been cautioning the public regularly on high investor risk in cryptocurency including issuing warnings about virtual currencies. In a published notice, CBSL stated that cryptocurrencies are unregulated financial instruments that have no regulatory oversight or safeguard relating to its use in Sri Lanka adding that it had not given any license or authorization to any entity of company to operate schemes on any virtual currencies including cryptocurrencies.
