The Central Bank of Sri Lanka (CBSL) and the government are developing legal and supervisory safeguards to protect the public from large-scale cryptocurrency scams, Central Bank Governor Dr Nandalal Weerasinghe said.
He was speaking at the Sri Lanka FinTech Festival 2026 in Colombo last week. Dr Weerasinghe said the necessary legal framework, supervisory mechanisms and safeguards were being prepared to protect Sri Lankans from incidents involving cryptocurrency and other digital assets.
He said holding cryptocurrency as an asset is not an offence in Sri Lanka, but it cannot be used as a legally recognised means of payment. The restriction is meant to stop cryptocurrencies replacing the Sri Lankan rupee in domestic transactions and to protect the country’s monetary sovereignty, he said.
The Ministry of Digital Economy has prepared a concept paper on regulating virtual assets and sent it to the Department of Legal Draftsman, which drafts bills for Parliament. Deputy Minister of Finance and Planning Dr Anil Jayantha Fernando said Cabinet had approved steps towards a regulatory framework covering cryptocurrencies and other virtual assets.
Under the proposed framework, the Securities and Exchange Commission (SEC) is expected to be the main regulator. Plans also include a registration system for cryptocurrency exchanges and for institutions that hold digital assets on behalf of customers, known as custodial services.
The government is also moving to strengthen measures against money laundering, terrorist financing and proliferation financing involving virtual assets. The remarks came after the reported theft of more than US$6.3 billion in digital assets from Binance, described as the world’s largest cryptocurrency exchange, which has raised concern about the security of crypto holdings worldwide.
Background
Cryptocurrencies are digital tokens traded on online platforms. They are not issued or guaranteed by any central bank, and their prices can swing sharply. In many countries, investors have lost savings to fraudulent schemes that promise high returns.
The position set out by the Governor, that ownership is permitted but use as a payment method is not recognised, means holders have had little formal protection if a platform fails or defrauds them.
A concept paper is an early stage in the law-making process. A bill must still be drafted by the Legal Draftsman, published in the Gazette and passed by Parliament before any new rules take effect.
What it means
For now, Sri Lankans who hold cryptocurrency are not committing an offence by doing so, but businesses cannot be required to accept it as payment, and buyers and sellers have no specific legal protection if a platform collapses or defrauds them.
If the proposed registration system for exchanges and custodial services is introduced, customers would be able to check whether a platform is registered with the regulator before handing over money. Until a law is in place, anyone approached with an offer of guaranteed crypto profits should check it carefully with a licensed financial institution.
