The Cabinet of Ministers has approved a proposal to introduce a legal framework regulating virtual assets and virtual asset service providers (VASPs), Ada Derana reported — the government’s most concrete step yet toward bringing Sri Lanka’s digital asset sector under formal supervision.
The proposal was presented by President Anura Kumara Dissanayake in his capacity as Minister of Digital Economy. It seeks to establish a regulatory framework addressing the growing use of virtual assets, including cryptocurrencies, and to reduce the risks of financial crime associated with them.
Ada Derana’s report did not name the agency that will act as regulator, set out the compliance obligations operators will face, or indicate when draft legislation will reach Parliament.
Months of groundwork
The decision follows a steady policy shift. In June, the Securities and Exchange Commission and the Ministry of Digital Economy began joint work on a regulatory framework, holding an awareness session for senior officials from the Central Bank, the Colombo Stock Exchange and the ministry. That marked a departure from years of Central Bank warnings against cryptocurrencies, which it had described as carrying fraud risk, extreme volatility and money-laundering exposure.
Answering questions in Parliament on July 11, Finance and Planning Deputy Minister Anil Jayantha Fernando outlined a phased approach, Daily FT reported. The sequence he described begins with amending the Financial Transactions Reporting Act to bring VASPs under anti-money laundering and counter-terrorist-financing supervision by the Central Bank’s Financial Intelligence Unit, then identifying operators already active in the market, and only afterwards building a prudential regulatory regime.
Fernando said the SEC had been proposed as the prudential regulator for virtual asset service providers — a designation that was at that point subject to Cabinet approval. He said four ministerial subcommittee meetings had been held to advance the work, which is aligned with Financial Action Task Force recommendations.
Cryptocurrencies are not legal tender in Sri Lanka and remain outside the regulated financial system. The Central Bank has not authorised any cryptocurrency exchange, trading platform or mining operation to operate in the country.
Source: Ada Derana — Cabinet approves legal framework to regulate virtual assets.
