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The Port City Economic Commission Bill introduced to parliament by President Gotabaya Rajapakshe on the 8th of April 2021 has arguably been the most talked about legislation in recent times. The 269 acres of reclaimed land off the coast of Colombo has steadily gained the attention of people from all corners of life. The bill was introduced to the public as the nation was beginning to celebrate the Sinhala and Tamil New Year, as a result citizens only had two working days to contact attorneys, many of whom were on vacations themselves to analyse the legislation and present any petitions against the proposed bill. Many have come to believe that the timing of the release is rather strange and may have been an attempt to facilitate/cover up nefarious activities in the present and the future.
The bill proposes the establishment of a special Economic Commission that would in charge of administration, regulation and control of all business and other operations within the Port City region. The bill proposes that a wide range of powers be granted in order for the commission to operate as a Single Window Investor Facilitator and separate governing body for the Port City Region.
Clause 73 of the bill goes on to state that certain laws pertaining to Sri Lanka will not be applicable in the region. These include the Inland Revenue Act, Board of Investments of Sri Lanka Law No.4 of 1978 and Foreign Exchange Act No.12 of 2017. However with the restrictions of the Foreign Exchange Act investors are hopeful that it would open Sri Lanka to the world of crypto currency and forex trading.
Crypto currency commonly referred to as virtual currencies simply put is another form of money. It is similar to real world currency but it has no physical embodiment in the real world such as a gold bar or bank note. While many consider it the future of finances Sri Lanka has been slow and somewhat
reluctant to adopt the medium which is considered as the most revolutionary concept since the dawn of the internet. Due to its decentralized nature it would make the concepts of Central Banks obsolete.
In Sri Lanka according to the Foreign Exchange Act No.12 of 2017 it is not a recognized form of “currency” as highlighted by S.31 (1) (a) of the Act.
“currency” includes coins, currency notes, postal orders, money orders, cheques, drafts, travelers’ cheques, letters of credit, bills of exchange, promissory notes, other electronic fund transfer cards and digital currency;
Foreign Exchange Act No.12 of 2017 S.31 (1) (a)
In terms of Forex Trading only authorized bank as described in the FEA are allowed to deal in Foreign Exchange and any person in Sri Lanka who does so will be in violation of the FEA. The Central Bank of Sri Lanka has gone on to state that legal action will be taken against those who engage in such trades in violation of the FEA.
Despite the fact that virtual currencies such as Bitcoin and Ethereum have gained popularity all over the world and many nations are still reluctant to pursue this new field of investment. The main obstacle that is faced in promoting virtual currencies is the proving of the legitimacy of the field. Similarly in Sri Lanka although there is a growing demand for the incorporation of virtual
currencies into the market the government has not taken any steps to progress the field within the country.
Due to decentralized nature and absence of a regulatory body both nationally and internationally governments fear that virtual currencies have the potential to be used for sponsoring terrorism and initiating financial fraud. As a consequence of the absence of the regulatory framework citizens would not be able to pursue any legal actions should their assets be stolen by an unknown entity. Although the government has not outright banned the use of VC’s it has not taken steps such as Japan to promote its use either. As such the government advises extreme caution when dealing with Crypto currencies.
The recently presented Port City Bill has gone on to state that the Foreign Exchange Act will not hold in the Port City Region. As mentioned previously Forex and Crypto trading has largely been restricted by the FEA and the Port City has the potential to transform into the crypto currency hub of Sri Lanka allowing for investors to engage in trades without the governmental restrictions.
However despite these newly proposed freedoms in the region the threats still remain largely the same. At present special attention has not been drawn towards the dealing of crypto currencies and forex trading in the region. And with the growing number of petitions against the proposed bill it is unlikely that attention will be directed anytime soon. However if the Commission was to consider crypto currency as a viable source of currency in the region it is paramount that they find a way to manage or bi-pass the issues and potentially form a regulatory network to manage trades. Steps must also be taken to educate potential investors on the mechanics and benefits of operating crypto currency if the concept is to spread and laws are to be changed.
