The Cryptocurrency News Group Startups and Bitcoins in Sri Lanka

Sri Lanka (old — Tambapanni) had kept its sovereignty for more than thirteen hundreds years, until, in 1815, it was conquered by British redcoats. Sri Lanka gained its independence back in 1948. Later in country’s history, the rise and fall of Communist regime as well as 35-year-war between Liberation Tigers of Tamil Ealam (LTTE) and the central government had radically affected SL political system.

Sri Lanka has more than 60 registered parties. The unicameral, 225-members Parliament is dominated by “The United National Front for Good Governance” (UNFGG) with 106 seats, opposed by the left-wing “United People’s Freedom Alliance” (UPFA) with 46 deputies. UNFGG is a loose alliance of conservative, nationalists parties, which supports the current Sri Lanka’s President Percy Mahendra Rajapaksa, criticized by many for his authoritarian style of governance.

The export of coffee had been a cornerstone of Ceylon’s economy until 1869, when it was replaced by tea. Today’s Sri Lanka is one of the most prosperous countries in the Southeast Asia with tea taking 12% in SL’s total export, while more than 40% is textile products. Sri Lanka’s service sector (including tourism) contributes 60% to its GDP, while the agriculture — 12%.

SL’s services orientated economy creates a plethora of market opportunities for local tech entrepreneurs. However, high administrative and legal barriers, underdeveloped infrastructure, lack of seed and VC financing as well as brain-drain to the neighboring states have undermined the growth potential of the local startup ecosystem.

The legal status of Bitcoin is not defined in Sri Lanka. According to short commentaries of local bureaucrats, SL Central Bank seems to be supportive of digital currencies. However, CB officials consider crypto as something to look forward to only in the future, which might take 5 to 10 years. This position could be partially explained by a relatively low Internet penetration rate in Sri Lanka, which makes most of its citizens still unaware of Bitcoin. Anyhow, selling/ buying crypto-currencies and organizing ICOs are not against the law in SL.

Business Notes for Startups Founders:

  • political climate: indifferent;
  • economic climate: marginally friendly;
  • regions to focus: locally;
  • industries to focus: e-services (tourism), e-sports, entertainments;
  • major limitations: slowing economy (GDP growth rate has fallen down from over 15% in 2012 to under 4% in 2017), services contribute almost 60% to GDP, CB rate at more than 7%, fixed Internet penetration rate is under 30%;
  • stimulus: large population of over 21 million, high low-income consumers (per-capita at about $4000);
  • opportunities: to create an e-business aimed at young urban users of mobile Internet in the entertainment sector;
  • Cryptocurrencies and ICOs (outlook): technically legal (positive).

The Cryptocurrency News Group Startups and Bitcoins in Sri Lanka