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The Tightrope Walk on Decentralised Finance and Cryptocurrencies

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By Charith Gamage

Cryptocurrencies together with Decentralised Finance (DeFi), the finance ecosystem that extends cryptocurrencies into banking territory, can positively impact developing countries. But it is not quite so straightforward and is still a double-edged sword for developing markets like Sri Lanka. So, how should the country position itself to face the key challenges ahead?

Since its inception following the Global Financial Crisis in 2007-2008, as an alternate digital asset, cryptocurrency has always been a two-edged sword, abundantly subjected to scepticism.

Some of this scepticism has a rationale behind it. Cryptocurrencies do not have an underlying cash flow, such as that for stocks of firms, nor do they have an inherent material value, such as for assets like gold. Being located inches away from the regulatory radar, they can also be equally prone to criminal activities. If that is not enough, bitcoin mining, the process by which new transactions are validated on the network, consumes a lot of energy. So, despite being a crypto enthusiast, even billionaire Elon Musk once stated, it has an environmental impact, too [1].

In the face of these challenges, the recent cryptocurrency price surge with the Covid-19 Pandemic has taken many by surprise. What caused the market to embrace them, spearheaded by its most popular type, Bitcoin’s spiralling 600%+ rally? According to crypto proponents, the value stems primarily from its design that can self-sustain as an alternative decentralised system to the traditional systems. In other words, the market is ready to pay the price for its ability to function as an asset over which no centralised person or authority has control. So, the claim, as the pandemic engulfed global economies, is that investors may have lost faith in central bank policies and their pursuit for an alternate asset that has resulted in this price movement.

DeFi, on the other hand, extends this concept and allows cryptocurrencies to function in a decentralised banking environment that may even have immense benefits to developing countries. As the debate continues, it is worth finding out more on the recent emergence of DeFi; how could it unlock the potential of Emerging/Frontier markets, and at what cost? What are the key hurdles to pull the meat from the bone moving forward?

What is DeFi, and how does it work?

The idea of DeFi is more broad-based than one of its workhorses, cryptocurrencies, which most are familiar with as a medium of exchange or store of value, and it builds on a fundamental structure known as the blockchain. The system allows it to operate without the need for intermediaries, such as traditional financial institutions like conventional commercial banks, brokerages, and of course, authorities such as central banks. However, it has its own ecosystem that recreates the traditional financial system. So, it is logical to say that DeFi refers to the decentralised banking and financial system that the technology is based on and includes components such as lending and borrowing services for cryptocurrencies (and many more). To put it simply, it is an alternative banking system in the digital space with digital currencies that has no middlemen (such as commercial or central banks who have controlling power) and with rules that are already written into it. Today, it mostly runs on the Ethereum blockchain, the second most popular currency after Bitcoin. DeFi has rapidly evolved in recent years, and, for example, Aave, Marker, and Curve Finance are the biggest lending systems in this space, with the sum of all assets deposited in DeFi closer to 45 billion USD [2].

Without banks or lawyers, as in the traditional financial system, DeFi is built with smart contracts, a self-executing contract built on the blockchain when predetermined conditions are met, and allows economic agents such as the general public and firms to engage in banking activities.

Because this architecture differs fundamentally from bringing the same traditional banking into the digital space, as happens in online banking, many can see that it will benefit developing countries when traditional financial systems fall apart. Nevertheless, it comes at a cost, where the country needs to overcome challenges to harness its potential.

Why exploring DeFi is pronounced in emerging and developing markets

It is not a secret that the lack of financial intermediation in the developing world under the conventional system hinders their economic potential. Although Sri Lanka’s unbanked population (26%) is somewhat lower than the global average (31%), it is unclear how certain groups’ failure to conform to formal regulations and paperwork around these institutions distances them from the entire expected services they desire (Data Source Findex 2017). On the other hand, economic agents have fewer investment opportunities to invest their wealth for a better return in economies with underdeveloped markets. DeFi seems to have better answers to those questions.

For example, a UNICEF project shows that DeFi can uplift those lives [3]. The project, Satchel, a Blockchain-based DeFi service created by a research group from Berkeley, helps fulfil the financial needs of those underprivileged communities by allowing them to pool their funds together and earn interest. The concept could be extended to pool their money and lend it out to small businesses; in this way, the community can use the interest earned for their purposes while the local small businesses fulfil their funding needs. So, DeFi can thus give an alternative, if not more than that, to regular banking, for small businesses and communities in rural regions, even if they are unable to satisfy the criteria of traditional banking.

Apart from improving financial inclusion among rural communities, DeFi clearly has other benefits with proper education, such as an efficient cross-border fund transfer for businesses and remittances. Sending remittance through cryptocurrency can gain more attention in the future as a low-cost solution for ordinary remittance transfers and currency conversions that can eat up as much as 7% of those flows. Also, DeFi can be easily integrated with the Universal Basic Income (UBI) programmes discussed in a previous article that empower low-income communities to lead the economy[4].

Most importantly, decentralisation allows the market to gain alternative power over the ability of traditional institutions to control the market by devaluing or increasing the money supply or by imposing unhealthy regulations on certain sectors. This balance could be healthy for the economy as it brings competition to the market over the conventional institutions.

What are the key challenges to be solved?

Although DeFi has the potential to boost economic activities, proper integration with society needs much more effort, including the development of digital infrastructure and literacy. A recent Daily FT editorial highlighted this challenge, citing that digitisation efforts will not be fruitful unless the underlying foundation is strengthened [5].

In addition, the emergence of an alternate banking system via DeFi can cause unprecedented challenges to economies. Of course, it can create “systemic risks” and propagate instabilities in conventional financial systems, depending on how interlaced they are. Having dominated the conventional monetary system, they can also lessen the effectiveness of the monetary tools and power of the institutions such as central banks. Although these discussions are still rudimentary, given that economics related to DeFi have not been tested at scale, they will be more hot topics as the technology grows.

On the other hand, DeFi regulation is one of the most daunting tasks, as exemplified by the experiences of many countries that are currently trying to combat it. At the moment, bringing capital gain income from crypto assets under the tax net, regulating crypto exchanges to avoid the misuse of technology, and curbing phoney cryptocurrency schemes, are the most popular topics in this space. Meanwhile, a Forbes article, citing an expert report by Chainalysis, shows that crypto in criminal activities is not as large as commonly believed [6]. While this fraction was deficient, 2.1% in 2019 and 0.34% in 2020 out of the total transaction volume, the article shows that the traditional non-crypto methods may still facilitate illicit activities much more frequently than these methods. Although this is a positive indication for authorities to welcome the technology, there is no guarantee that they would be exacerbated in the developing nations with relatively weaker institutions once popularised. With that being said, the overregulation approach may not be the best answer, but the easiest and costliest approach that wipes out complete benefits in the dash for DeFi.

The Way Forward

Despite the debate around cryptocurrency, the decentralised currency together with DeFi, the alternate decentralised financial system, undoubtedly can cause a significant impact on the developing world to increase the productivity of those economies. In particular, it is more pronounced to allow financial intermediation for those who found refuge under the conventional system for various reasons. It has gone mainstream now on Wall Street while top-level universities and researchers are involved in the development, despite all chaos surrounding cryptocurrency. More importantly, the underlying technology, blockchain, is considered one of the most promising emerging technologies at the moment.

From the Sri Lankan perspective, now it seems the government insists on looking deeply at the crypto and blockchain space[7]. This initiative is a positive sign and, if successful, will be a good foundation for exploring the ecosystem, DeFi, more broadly and carefully for better policies.

Not to mention, diving down the rabbit hole of DeFi requires a cohesive approach strengthening the digital infrastructure, facilitating a healthy Conventional-DeFi integrated ecosystem, hunting for policy instruments to combat the knock-on effects, and establishing a healthy and supportive regulatory framework. So, it will help the country shape the landscape to stay on par with the peer trading partners trying to reap the full potential of the technology under a controlled environment, and, of course, without blindly embracing it nor throwing out the baby with the bathwater.

The writer, a former Senior Assistant Director of the Central Bank of Sri Lanka, is a PhD candidate attached to the Monash University, Australia. He pursued his undergraduate studies in Engineering from the University of Moratuwa and graduate studies in Finance/Economics from the University of California, Berkeley, USA and the University of New Mexico, USA. He would like to thank Abigayle Goldstein (Lobo Friends Program at UNM) for commenting on the article and helpful suggestions. The views and opinions expressed in this article are those of the writer, and he could be reached via charith.gamage@monash.edu



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From the missing to the missing truth and beyond

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A file photo of Foreign Minister Vijitha Heath addressing the UNHRC.

by Jehan Perera

The government is preparing to meet the challenge of the UN Human Rights Council next month. A Sri Lankan delegation led by Foreign Minister Vijitha Herath is expected to attend the 63rd session of the UNHRC in Geneva, where the UN High Commissioner for Human Rights will present a written update on Sri Lanka. The government has already submitted its response to the advance version of the report prepared by the Office of the High Commissioner for Human Rights. The Foreign Minister, accompanied by officials from Colombo and Sri Lanka’s Permanent Mission in Geneva, is expected to explain the progress made on reconciliation, accountability and human rights. This is therefore an important moment for the government. It is an opportunity not merely to defend its record but to make new commitments.

The government has been criticised, as were its predecessors, for the manner in which it has dealt with past human rights violations, especially those connected with the thirty year war. The vexed issue of thousands of missing persons remains at the centre of this criticism. The government has sought to strengthen the Office on Missing Persons by providing it with additional staff and resources. It has also given support to the excavations at the Chemmani mass grave. Justice and National Integration Minister Harshana Nanayakkara has told Parliament that the government has allocated Rs. 57 million for the excavations and related legal work, though that figure has not been set against the cost of comparable forensic operations elsewhere.

The government also took the significant step of holding a national event in Jaffna to mark the International Day of the Victims of Enforced Disappearances. Minister Harshana Nanayakkara attended the event together with the Chairman of the Office on Missing Persons (OMP), Mahesh Katulanda, and other senior officials and political representatives. Their presence was meant to demonstrate the government’s commitment to addressing the issue. But on the victims’ side there is continuing dissatisfaction. The commemoration in Jaffna was met by a protest outside the District Secretariat, organised by families of the disappeared, who demanded to know what happened to relatives who, according to their accounts, surrendered to or were taken away by the military and were never heard from again.

Jaffna Protests

The protests in Jaffna are a reminder of the gap that remains between what the government is trying to do and what the victims expect. For these families, compensation and death certificates are not substitutes for knowing what actually happened to those they lost. The protests, and the police action taken against some of those who demonstrated, were reported by the international and Tamil media and by international human rights organisations, and overshadowed much of what the government had hoped to showcase at the Jaffna event. The OMP’s mandate is to establish the fate and whereabouts of missing persons, clarify the circumstances in which they went missing, and provide redress and assistance to their families. Accordingly, it has sought to verify complaints, remove duplicate entries, encourage people who have not yet made complaints to come forward, and facilitate compensation and other forms of assistance. The families of victims expect the OMP to do more to clarify the circumstances in which their loved ones went missing. An example would be the disappearance of 158 displaced Tamil persons from the Eastern University campus in Vantharumoolai, Batticaloa District, who were rounded up and forcibly removed in front of thousands of other similarly displaced persons, including the officer in charge Prof T Jayasingam.

The government has also increased the support available to families of the missing, and says it is accelerating the OMP’s investigations. But the scale of what remains undone is stark. There are around 11,000 complaints remaining to be investigated, according to the Justice Minister, while the OMP has reported that final information has been established in only 31 cases, communicated privately to the families concerned. On the government’s own figures, that puts the clearance rate for establishing fate and whereabouts at well under one percent of the outstanding caseload. There is a limit to what the OMP can do even with more resources and time. Its mandate is primarily to establish the fate and whereabouts of individual missing persons. It was not intended to produce the comprehensive, public account of the past that victims and the country as a whole require.

In 2015, the government headed by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe committed itself to establishing such a commission as part of a comprehensive approach to dealing with Sri Lanka’s past. Human Rights Council Resolution 30/1, which the government co-sponsored, specifically welcomed the proposed establishment of a “commission for truth, justice, reconciliation and non-recurrence”, together with an Office on Missing Persons and an Office for Reparations. However, the commitment to a truth-seeking mechanism was never fulfilled. The government should consider setting one up now. There is a growing feeling among Tamil people in the North and East that the government is failing to deliver on promises that are important to them. On issues important to them, they feel this is once again a Sinhala-dominated government like all the ones that came before.

Establish Truth

For the past two years the government has been concentrating on problems that it deems are important to the country as a whole such as the economy, development, poverty alleviation and corruption and criminality. However, the government needs to demonstrate that national unity means addressing the concerns of all communities, including those whose wounds from the war remain unhealed. Some of its own institutions have begun to act on this. The Office for National Unity and Reconciliation recently staged a drama entitled From Yakaweva to Nandikadal, depicting relationships between people that transcend the destruction caused by war. The drama portrayed the sufferings as well as the prejudices on both sides of the divide, from the Kebithigollewa bus bombing to the final days of the war around the Nandikadal lagoon. Its central message is that without forgiveness there cannot be reconciliation.

Particularly moving was the fact that the actors themselves came from families touched by the violence on both sides. The son of an LTTE Black Tiger leader and the daughter of an Army officer were among those who performed, alongside others who had experienced and survived some of the sites of carnage. The fact that a state institution is taking this message of reconciliation forward is itself a testament to the government’s openness to dealing with the past. A government institution can reach a population far larger than any civil society campaign could reach on its own, simply because the machinery of the state is so much more extensive. It is in this context that the government needs to give serious thought to setting up a Truth and Reconciliation Commission as the next step in the truth-seeking process. Special care will need to be taken to ensure that those who are appointed are not only politically non-partisan, but are acceptable to all the communities.

A Truth and Reconciliation Commission cannot by itself resolve all the wounds of the past. Nor can it replace criminal investigations or judicial proceedings where these are necessary. But it can provide something that existing institutions cannot provide on their own. This would be a comprehensive national process through which victims can be heard and the truth can be established. The general population needs to understand what happened, so that the country can begin to acknowledge its past without passing it on indefinitely to future generations. The government has already taken several steps. It is supporting the search for the truth at Chemmani. It has begun reaching out to families of the disappeared. Its own institutions are producing messages of reconciliation. But these are still not delivering the results that the victims and their families want. The next step should be to bring these efforts together to begin the journey from the missing to the missing truth, and from there to comprehensive justice.

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The long road to educating Sri Lanka’s Bhikkhunis

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Bhikkunis: Image courtesy Buddhist Society of South Asia

A robe without recognition:

 

by Anushka Kahandagamage

Education is the right of every child. Yet somewhere between childhood and the robe, that right becomes precarious for many Buddhist women in Sri Lanka, threatening not only their social standing, but their fundamental access to learning and the institutional discrimination they face. This piece is not about Buddhist disciplinary rules, which discriminates women, rather about how the state’s refusal to fully recognise bhikkhunis as bhikkhunis quietly determines what they are, and are not, permitted to learn.

Unlike dasasil mathas, who occupy a distinct and unofficial category within Buddhist renunciation, bhikkhunis belong to a formally ordained order recognised within Buddhist monastic tradition itself. Dasa sil mata means ‘ten-precept mother.’ They are women who observe the ten precepts (rather than the fuller Vinaya) and live a renunciant, celibate life, often in robes, but formal ordination has not translated into formal recognition by the state. Even after a Supreme Court ruling affirmed their right to be identified as bhikkhunis on their National Identity Cards, many still do not hold one. This stems from the hesitation of the male-dominated Buddhist hierarchy to recognise these women as part of the Theravada tradition, specifically refusing to validate their higher ordination. The identity card lists her title as Dasa Sil Mata. The ruling exists on paper, but they are still waiting for their identity cards. This is not a small bureaucratic oversight. It is the first link in a longer chain, one that reaches, eventually, into the classroom.

A Name Withheld

In Sri Lanka, there are 827 pirivenas, traditional monastic colleges that have, for centuries, served as the primary institutions of Buddhist education. Of these, only 12 are dedicated to female renunciants at all, and of those 12, just five serve fully ordained nuns specifically. The imbalance is stark on its face: 827 institutions for monks, five for fully ordained nuns. But the discrimination here is not only a matter of numbers, but it is also written into the very language used to name these institutions. Monks’ schools are called pirivena, a term carrying centuries of institutional weight, historical continuity, and state recognition under Sri Lanka’s education laws. Bhikkhunis’ schools, by contrast, are not called pirivenas at all. They are designated Buddha Sravika Meheni Adhyapana Ayathanaya (Institute for the Education of Buddha’s Female Disciples), a separate, parallel term that, however similar in function, withholds from bhikkhuni institutions the same legal and institutional status that the word ‘pirivena’ confers. Since there are ten-precept mothers, the institutes have not given the same name as the pirivena and lack the official as well as social recognition they deserve.

A Pattern a Century in the Making

Following the decline of the Buddhist nun (bhikkhuni) order after the Polonnaruwa period, the first woman to be robed again was ordained in 1905 as a dasasil matha. Although dasasil mathas have long served important religious and societal roles, they have historically lacked access to formal education. Unfortunately, today also, this pattern continuous to exist. Education, in this context, is never just about literacy or dhamma study. It is the currency of religious authority. A bhikkhuni denied equivalent education or educated in an institution the state refuses to name a pirivena, is denied that religious authority. She may know the Tipitaka as well as any monk yet will lack the institutional stamp that would make a lay community trust her reading of it. It was not indifference from the public; it was the accumulated effect of a system that has spent centuries teaching devotees, implicitly, that a woman’s robe does not carry the same weight as a man.

The female renunciants, both dasasil mathas and bhikkunis, although they wear robes, have not been regarded as individuals capable of comprehending or preaching dhamma, simply because they are women. This is most visible in education, the pirivena system, developed historically to train bhikkhus, offered dasasil mathas and bhikkunis no equivalent institutional pathway, no comparable curriculum, certification, or state recognition. This exclusion is notable because it runs counter to Sri Lanka’s broader educational trends, where women have historically outnumbered men in general university enrolment, the gap here is specific to monastic/religious education rather than a reflection of wider societal restrictions on women’s schooling. The country’s National Education Commission Policy has a section on Pirivena education. However, it does not address the education of Buddhist nuns, nor does it mention nuns within the policy. I recently learned that the policy was being reviewed, with a committee appointed by the Ministry of Education, scheduled to begin the review on the 1st of September. This presents an important opportunity to raise the issue of nuns’ education and advocate for its inclusion in the revised policy.

The monks and nuns’ education institutes are funded by the government, which allocates only 5,000–6,000 LKR per student for the entire year. This sum is grossly inadequate to cover even basic institutional needs, accommodation, food, learning materials, and the maintenance of the physical premises, let alone to support any meaningful expansion of the curriculum. With this level of funding, these education institutes are struggling to sustain themselves, and many are forced to rely almost entirely on external support simply to remain operational. This is where the disparity becomes most visible. As female renunciants have historically not been taken seriously, regarded neither as authoritative teachers of dhamma nor as figures worthy of the same reverence extended to their male counterparts, their education centres receive far fewer lay offerings than those for male renunciants. The result is a widening resource gap that mirrors and reinforces the very discrimination that caused it. Underfunded institutions produce fewer well-trained female scholars, which in turn reinforces the perception that female renunciants are less capable, a perception that then justifies continued underinvestment. Without deliberate intervention, either through equitable government allocation or targeted lay support, this cycle is likely to persist rather than resolve on its own.

Sitting Alone at the Bo Tree

I was at Jaya Sri Maha Bodhi in Anuradhapura, where a few monks sat preaching in the shade of the Bo Tree, each surrounded by small clusters of lay devotees. Nearby, I noticed a few female Buddhist renunciants, though I could not immediately tell whether they were bhikkhunîs or dasasil mathas, since visually, in their robes and demeanour, they appeared indistinguishable to an outside observer. Most of them sat alone, without the small crowds of devotees gathered around the monks nearby. This, too, is not incidental. Because women cannot enter the sâsana through the same pathway to ordination, available to men, many Buddhist female renunciants remain dasasil mathas, a status that carries the appearance of monastic life without its legitamised spiritual standing. They observe the 10 precepts, wear robes, and live in renunciation, yet occupy a lower, unofficial rung in the religious hierarchy, one that grants them neither the ordination lineage nor the institutional recognition given to monks. However, in June last year, the Supreme Court of Sri Lanka delivered a landmark majority ruling in SC/FR/218/2013, affirming that fully ordained Buddhist nuns have the fundamental right to use the title ‘Bhikkhuni’ on their National Identity Cards, legally recognising the de facto existence of the Bhikkhuni Sanga.

A Closed Loop

Social discrimination and educational discrimination feed each other in a closed loop. Because bhikkhunis have fewer, less recognised institutions, fewer are formally trained to a standard the public recognises. Because fewer are recognised as authoritative teachers, fewer devotees seek them out or support them. Because they attract fewer devotees, the education institutions of female renunciants remain under-resourced and easy to overlook in state budgets and in popular imagination alike. A dasasil matha or bhikkhuni without an active following also lacks the economic support that following brings, since in Sri Lanka’s monastic economy, devotees are patrons as much as students. The precarity is not only spiritual or bureaucratic; it is material, and it compounds across a lifetime spent in robes.

Until bhikkhunis’ education is named, funded, and recognised on the same terms as that of bhikkhus, this will remain a story not only about missing ID cards or under-resourced schools, but about an education system that continues to decide, quietly and continuously, which students are worth investing in. Education was supposed to be the one place where the women can speak for themselves, instead, for these women, it has become just another place where women have to ask permission to be heard.

(Anushka is a Sociologist who is working on contemporary Buddhist movements. She was formerly attached to the University of Colombo)

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.

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‘Memories of Milton – Live in Concert’ to enchant Dubai

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Seven Notes: Doing it in Dubai

Sri Lankan music knows no borders. Wherever our people go, our melodies follow — and our musicians make sure of it.

From Qatar’s Exit, to Melbourne’s EBONY, to Toronto’s Ceymphony, and Dubai’s Seven Notes, Sri Lankan bands abroad continue to keep the community connected to home, through song.

In July, Rajiv Sebastian set the Dubai stage alight with the band Seven Notes, creating an unforgettable night for Sri Lankans in the UAE. And the live-wire behind that magic? Niluk Uswaththa of Seven Notes.

Well, Niluk says he isn’t stopping there.

Now, Dubai is preparing for something truly special — ‘Memories of Milton – Live in Concert’, a grand musical tribute to one of Sri Lanka’s most beloved voices: Milton Mallawarachchi.

For more than a decade, Milton Mallawarachchi was a trending force in Sri Lankan music. With nearly 850 songs and over 35 albums to his name, he gave us melodies that became the soundtrack to our lives — songs of love, longing, and life itself.

On Saturday, 26th September 2026, from 8:00 PM to 3:00 AM, the Mercure Hotel, Al Barsha Heights, Dubai, will transform into a space of nostalgia.

Ranil Mallawarachchi; Carrying forward his father’s legacy / Yenuli Neriah

With the spotlight on Ranil Mallawarachchi — Milton’s eldest son, carrying forward his father’s legacy — along with Yenuli Neriah and Tharaka, the evening will certainly bring Milton’s timeless classics back to life … on one stage.

Seven Notes will do the needful, providing the live music that made Dubai dance before.

According to Niluk, this isn’t just a concert.

“It’s designed as a nostalgic musical journey — to bring cherished memories and beloved songs back to life,” he says.

And he promises: 26th September will be a night to remember.

In fact, Niluk Uswaththa has become a driving force for Sri Lankan entertainment in Dubai.

Through Seven Notes, he ensures the community always has something special to look forward to — especially when it comes to music that feels like home.

The success of these overseas shows naturally raises one big question back in Sri Lanka.

Yes, music lovers, in Sri Lanka, are keen to know whether the Seven Notes band will pop up in Colombo, sometime soon, for a live performance?

Music lovers, island-wide, will be watching … and waiting!

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