Is cryptocurrency legal in Sri Lanka? Central Bank Governor explains

Although Sri Lankans cannot use cryptocurrency for transactions in the country, investing in cryptocurrency or virtual currency has no legal impediment due to the non-existence of laws or regulations, according to the Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe.

Investing in cryptocurrency has become a widely debated topic at present, following the revelation that Minister of Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe owns cryptocurrency.

This was revealed based on the report submitted on assets and liabilities to the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) by Minister Wasantha Samarasinghe.

When inquired on the legality of cryptocurrency in Sri Lanka, Governor Nandalal Weerasinghe explicitly stated that cryptocurrency cannot be used for transactions within the country.

Speaking during a media briefing in Colombo today, Governor Nandalal Weerasinghe said only Sri Lankan Rupee can be used for transactions within the country.

He said even US Dollars cannot be used for transactions unless special permission is received through the Central Bank.

Special provisions have been made for importers and exporters, the Governor clarified.

Governor Weerasinghe said Sri Lankans are allowed to invest in various avenues such as treasury bills and the Colombo Stock Market which are regulated under Sri Lankan law.

He said investments in gem and jewelry and transactions involving casinos also come under local regulations which prevent such activities from being used for money laundering.

CBSL Governor Dr. Nandalal Weerasinghe noted that new laws will be formulated to prevent cryptocurrency virtual assistance service providers from being involved in money laundering activities.

He said they are hoping to enact new laws with the support of the government next year which will allow virtual assistance service providers to register with the Financial Intelligence Unit (FIU) of Sri Lanka.

The CBSL Governor said this will ensure such entities share data with the Central Bank and prevent them from using the platform for money laundering activities.