Sri Lanka Central Bank Says Bitcoin Cannot Solve Economic Crisis

Billionaire investor Tim Draper got a more challenging reception than he anticipated when proposing Sri Lanka, a bankrupt nation, to Bitcoin.

Draper was in Sri Lanka on Tuesday, talking with local entrepreneurs about cryptocurrency adoption. The entrepreneur met the country’s President Ranil Wickremesinghe on that day regarding the matter.

Draper went to the country’s central bank to present the same pitch. However, Governor Nandalal Weerasinghe, who is still working on fixing the nation’s financial challenges, did not embrace the idea. The central bank governor responded that Bitcoin adoption in Sri Lanka wouldn’t be a 100% reality.

Weerasinghe said introducing Bitcoin would worsen the crisis; therefore, they are still deciding to take that route. The government official stated that other technologies could be effectively used in financial services to promote social inclusion and quickly disburse funds to those in need.

Financial Crises Driving Nations To Bitcoin

Draper described Sri Lanka as a corrupt nation during the meeting and fronted cryptocurrency as a solution. He argued that Sri Lanka, a country known for its mineral resources, could have addressed its corruption by keeping perfect records through Bitcoin adoption.

Last year, Sri Lanka faced one the worst-ever economic crisis in its history, which drove prices up and caused shortages of food and fuel supplies across the nation. As a result, such difficulties stirred protests that forced President Gotabaya Rajapaksa to flee the country and later announce his resignation.

Sri Lanka is currently in talks with a group of private creditors from Japan, China, and India to restructure its debt in line with the IMF’s plan. The country is restructuring its debt payments of about $51 billion out of $28 billion, which has to be repaid by 2027.

According to Draper, Sri Lanka can address its financial crisis through Bitcoin adoption. The billionaire investor views the cryptocurrency as a good store of value, not subject to government or central-bank policy changes.

In the meeting, Draper cited El Salvador. This nation adopted Bitcoin as a legal tender after its government embraced crypto to boost financial inclusion and economic development.

Countries like Zimbabwe, Turkey, and Venezuela also witness ongoing financial crises. They are suffering from hyperinflations, and as a result, their citizens have been increasingly turning to cryptocurrency as a means of exchange and a store of value.

According to Draper, Bitcoin is one of the essential tools for humanity to overcome financial crises. He believes investors should continue seeking opportunities by investing directly in Bitcoin and its underlying technology (Blockchain).

Bitcoin Price Action

Today, Bitcoin is trading at $23,633 with a trading volume of $30.7 billion. Bitcoin has been down 0.93% in the last 24 hours. The cryptocurrency’s price rose by 3.22% in the previous seven days.

Bitcoin’s value fell in November following the downfall of the FTX exchange, a plunge that rendered the cryptocurrency trading below $17,000 for several weeks. The cryptocurrency has so far recovered its value from November’s crash, boosted by institutional adoption.

Despite the ongoing brief uptick, the cryptocurrency has lost over 70% of its value since its all-time high above $69,000 recorded in November 2021. Tim Draper is still bullish, he believes the flagship cryptocurrency will hit $250,000 this year.

Featured image from Shutterstock, Chart from TradingView