Online Law, Crypto Risks and Missing Billions: Sri Lanka’s Hidden Economic Battles
Sri Lanka’s economic recovery could be threatened by regulatory failures, lost investment opportunities and weak financial oversight, former Finance and Foreign Minister Ravi Karunanayake has cautioned.
Highlighting several areas requiring urgent government action, Karunanayake questioned the continued existence of the Online Safety Act (OSA), warned about unregulated cryptocurrency activity and called for investigations into possible export-related financial leakages.
He argued that while regulation is necessary to protect national interests, poorly designed laws can damage investor confidence and restrict economic growth.
Karunanayake said the original intention behind the Online Safety Act was to protect vulnerable groups, including women and children, from online abuse. However, he claimed the legislation had been used primarily to target critics and suppress dissent.
“The law was not used for what it was intended,” he said, arguing that Sri Lanka should repeal the current legislation and replace it with a modern framework developed through consultation with stakeholders.
The former minister pointed out that the European Union has also raised concerns about the Act, particularly because Sri Lanka’s continued access to GSP Plus trade benefits depends partly on meeting governance and rights-related expectations.
He also claimed that Sri Lanka had lost potential investments because of the legislation, stating that some social media companies had considered establishing operations in the Colombo Port City but withdrew due to concerns over the regulatory environment.
Beyond digital regulation, Karunanayake raised concerns over cryptocurrency, describing it as a major gap in Sri Lanka’s financial oversight system.
He questioned why crypto assets had not been brought under a proper legal and taxation framework despite increasing global adoption.
“If cryptocurrency is not illegal but also not regulated, people can use it to move money out of the country,” he warned.
He added that the absence of clear rules creates opportunities for scams and financial crime.Karunanayake also called for closer examination of possible irregularities in export earnings.
He questioned whether missing funds could involve informal money transfer systems such as hawala or undiyal, or whether cryptocurrency channels were being used.
“If one billion dollars is missing from exports of around 18 to 20 billion dollars, that is about five percent,” he said, describing the figure as significant for a developing economy.
He urged the Committee on Public Finance to investigate the issue following recent statements by President Anura Kumara Dissanayake and Public Security Minister Ananda Wijepala.
The former minister also criticised Sri Lanka’s approach to attracting foreign direct investment, arguing that the country’s current incentives are insufficient.
He said excessive concern over satisfying international institutions has sometimes resulted in policies that discourage business expansion.
“The Government must stop being afraid of decisions,” he said, arguing that economic leadership requires taking calculated risks.
According to Karunanayake, Sri Lanka’s future depends on making difficult reforms, improving transparency and creating a business environment where investment, innovation and entrepreneurship can thrive.
At a time when the country is seeking economic stability after its worst financial crisis in decades, these unresolved issues could determine whether recovery becomes sustainable or remains fragile.
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