Recently, Tim Draper, an American venture capital investor, attempted to bring Bitcoin to Sri Lanka, but his attempt was outrightly rejected. He suggested the adoption of Bitcoin in Sri Lanka to help them tackle the ongoing economic crisis.
The legendary investor was in Sri Lanka to shoot an episode of Meet the Drapers, a reality show where aspiring entrepreneurs pitch their ideas to members of the Draper family. Draper met with the President and Central Bank Governor Nandalal Weerasinghe in between filming on separate occasions to push Bitcoin adoption. Unfortunately, Draper’s efforts were unsuccessful.
Draper briefed the media that his opening line, “I come to the Central Bank with decentralized currency,” was met with “we don’t accept” by Governor Weerasinghe.
Further Draper stated that he tried to question the administration’s ability and asked if they had the “guts to do it?”
To this, Governor Weerasinghe fired back, saying other technologies can distribute financial services. However, he had concerns about monetary independence under a Bitcoin standard. The governor stated:
We don’t want to make the crisis worse by introducing Bitcoin.
The comments from the governor echo the views of previous central bank governor Ajith Nivard Cabraal. The former governor had warned Sri Lankans that entities are not authorized to conduct cryptocurrency activities in the country. He also explicitly said that only the rupee is approved for use by the central bank.
Despite President Wickremesinghe declaring the country bankrupt in July 2022, the offer to integrate Bitcoin into the national economy was not taken up.
In April last year, protests broke out in Colombo, the capital city, over a lack of food, medicine, and fuel. The shortage of essentials crippled the country, mainly concerning transportation facilities, with buses, trains, and emergency medical vehicles unusable.
The failure to pay creditors resulted in the country defaulting after failing to pay a $78 million repayment in May last year. The government then secured a $2.9 billion bailout from the International Monetary Fund (IMF), but the funds are subject to China and India agreeing to the restructuring deal.
In rebuilding the economy, President Wickremesinghe told local business leaders the country must focus on transforming into a “highly competitive export-oriented economy. Inflation for January came in at 54.2%, down from September 2022’s peak, when consumer prices were nudging just short of 70%.
Draper’s idea of using cryptocurrency to help the economy was not an alien concept as several nations across the globe are using cryptocurrencies to tackle economic emergencies.
In July, Todayq News reported that after the resignation of Argentina’s economy minister Martin Guzmán in the midst of an economic emergency, Argentines purchased between two and three times the number of stablecoins they do on a normal weekend. Several significant crypto exchanges confirmed that consumers were hoping to safeguard their positions against a potential devaluation of the Argentine peso (ARS), whose buying power has decreased over the previous year as current global inflation hits the country even harder.
Similarly, in Chile, residents are using stablecoins to preserve their assets from recent record inflation and the peso’s continuing depreciation. In the past three months, stablecoin transactions on local crypto exchanges have increased by 50%. The two most widely used stablecoins, tether (USDT) and USD coin (USDC), saw a 50% increase in purchases during the second quarter of 2022.