SEC named virtual asset regulator in Sri Lanka

Sri Lanka approved a proposal to designate the Securities and Exchange Commission as the official regulator for virtual assets and virtual asset service providers, bringing crypto trading and digital asset platforms under formal oversight.

The cabinet of ministers greenlit the decision following a submission by the president in the capacity of minister of digital economy, stemming from recommendations made by a specialised sub-committee under the national coordination committee for anti-money laundering and countering the financing of terrorism.

Retail investors and traders previously relied heavily on offshore platforms and peer-to-peer channels to trade cryptocurrencies and digital assets.

Cabinet spokesman Nalinda Jayatissa noted that virtual asset service providers function without basic compliance obligations, reporting standards, or registration requirements for oversight because these platforms operate completely outside the local regulatory framework.

Financial surveillance rules enforced via the Prevention of Money Laundering Act and the Financial Transactions Reporting Act require strict customer due diligence and know your customer compliance to keep the island nation off international risk lists.

Under the new joint oversight model involving the Central Bank Financial Intelligence Unit and the Inland Revenue Department, the Securities and Exchange Commission will enact statutory provisions mandating that virtual asset service providers comply with anti-money laundering and countering the financing of terrorism frameworks, mandatory transaction reporting, and registration requirements.