By: Staff Writer
July 30, Colombo (LNW): Sri Lanka’s decision to appoint the Securities and Exchange Commission (SEC) as the country’s regulator for Virtual Assets and Virtual Asset Service Providers (VASPs) marks a significant policy shift in the digital economy. While the move has been welcomed by advocates of stronger financial oversight, it also raises important questions about regulatory readiness, institutional capacity and the future of innovation in the country’s emerging crypto sector.
The Cabinet of Ministers recently approved the proposal submitted by President Anura Kumara Dissanayake in his capacity as Minister of Digital Economy. The decision follows recommendations by a specialist sub-committee operating under the National Coordination Committee for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).
For years, Sri Lankan cryptocurrency traders have largely operated through offshore exchanges and peer-to-peer (P2P) networks. Since these platforms remained beyond domestic jurisdiction, authorities had little visibility over billions of rupees worth of transactions, making enforcement of tax laws, consumer protection measures and anti-money laundering standards particularly difficult.
Government officials argue that placing the SEC at the centre of regulation closes this long-standing gap. Under the proposed framework, VASPs will be required to register, comply with Know Your Customer (KYC) and Customer Due Diligence (CDD) obligations, submit transaction reports and work closely with the Financial Intelligence Unit (FIU) and the Inland Revenue Department.
Financial crime experts say these measures could significantly strengthen Sri Lanka’s compliance with international AML/CFT obligations. Failure to regulate virtual assets has increasingly become a concern for countries seeking to avoid scrutiny.
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