Sri Lanka

On-shore VASP

Not permitted.

Self-custodial wallet

Conditional · low burden.

Not permitted.

Not permitted.

Conditional · high burden.

Not permitted.

Conditional · high burden.

Crypto ATM

Not permitted.

Compare operating models across jurisdictions on the scenario hub.

Primary Legislation

Law / Regulation	Year	Scope
The Prevention of Money Laundering Act, No. 5 of 2006 (PMLA): This Act criminali	2006	The Prevention of Money Laundering Act, No. 5 of 2006 (PMLA): This Act criminalizes money laundering and establishes the legal framework for its prevention.
The Financial Transactions Reporting Act, No. 6 of 2006 (FTRA): This Act mandate	2006	The Financial Transactions Reporting Act, No. 6 of 2006 (FTRA): This Act mandates reporting institutions (which would include regulated VASPs) to report suspicious transactions and sets out customer due diligence (CDD) and record-keeping…
The Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005 (CS	2005	The Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005 (CSTFA): This Act criminalizes terrorist financing and implements the international convention.

Licensing Requirements

❓60%

The Prevention of Money Laundering Act, No. 5 of 2006 (PMLA): This Act criminalizes money laundering and establishes the legal framework for its prevention.

licensingthe-prevention-of-money-laundering

❓60%

The Financial Transactions Reporting Act, No. 6 of 2006 (FTRA): This Act mandates reporting institutions (which would include regulated VASPs) to report suspicious transactions and sets out customer due diligence (CDD) and record-keeping requirements. It also established the Financial Intelligence Unit (FIU).

licensingthe-financial-transactions-reporting-act

❓60%

The Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005 (CSTFA): This Act criminalizes terrorist financing and implements the international convention.

licensingthe-convention-on-the-suppression

❓60%

Financial Intelligence Unit (FIU) of Sri Lanka:

licensingfinancial-intelligence-unit-fiu-of

❓60%

Role: The FIU acts as the central national agency for receiving, analyzing, and disseminating financial information concerning suspected proceeds of crime and terrorist financing. It is responsible for enforcing compliance with AML/CFT laws by reporting institutions.

licensingrole-the-fiu-acts-as

❓60%

Central Bank of Sri Lanka (CBSL):

licensingcentral-bank-of-sri-lanka

❓60%

Role: The CBSL has been involved in discussions regarding the regulation of VASPs and is expected to develop the licensing framework and supervise VASPs for both financial stability and AML/CFT compliance.

licensingrole-the-cbsl-has-been

❓60%

Identification and Verification of Customers:

licensingidentification-and-verification-of-customers

❓60%

Individuals: Obtain and verify the customer's full name, permanent address, date of birth, nationality, and a unique identification number (e.g., National Identity Card (NIC) number, passport number). Verification must be done using reliable, independent source documents, data, or information.

licensingindividuals-obtain-and-verify-the

❓60%

Legal Persons/Arrangements: Obtain and verify the legal name, legal form, proof of existence, powers that regulate and bind the legal person/arrangement, and the names of relevant persons holding senior management positions.

licensinglegal-personsarrangements-obtain-and-verify

❓60%

Beneficial Ownership: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer, including for legal persons, identifying natural persons who ultimately own or control the customer.

licensingbeneficial-ownership-identify-and-take

❓60%

Purpose and Intended Nature of the Business Relationship: Understand the nature of the customer's activities and the purpose for which they intend to use the VASP's services.

licensingpurpose-and-intended-nature-of

❓60%

Simplified Due Diligence (SDD): May be applied where the risk of money laundering or terrorist financing is lower (e.g., small, low-value transactions), but the VASP must still be able to identify the customer and monitor transactions.

licensingsimplified-due-diligence-sdd-may

❓60%

Enhanced Due Diligence (EDD): Must be applied in higher-risk situations, such as:

licensingenhanced-due-diligence-edd-must

❓60%

Politically Exposed Persons (PEPs) and their family members/close associates.

licensingpolitically-exposed-persons-peps-and

❓60%

Complex, unusually large transactions, or unusual patterns of transactions.

licensingcomplex-unusually-large-transactions-or

❓60%

Transactions involving new products or business practices, and new technologies.

licensingtransactions-involving-new-products-or

❓60%

Transactions where the identity of the beneficial owner is difficult to ascertain.

licensingtransactions-where-the-identity-of

❓60%

For VASPs, this would also involve understanding the source of funds/wealth in crypto assets, the nature of associated wallets, and the purpose of large or frequent transfers.

licensingfor-vasps-this-would-also

❓60%

Conduct ongoing monitoring of the business relationship and transactions undertaken by the customer to ensure consistency with the VASP's knowledge of the customer, their business, and risk profile.

licensingconduct-ongoing-monitoring-of-the

❓60%

Keep customer identification data up-to-date, especially for high-risk customers.

licensingkeep-customer-identification-data-up-to-date

❓60%

Reporting Threshold: Any transaction (regardless of amount) or attempted transaction where there are reasonable grounds to suspect that it may be linked to money laundering, terrorist financing, or other criminal activities.

licensingreporting-threshold-any-transaction-regardless

❓60%

"No Tipping-Off": VASPs and their employees are prohibited from disclosing to the customer or any third party that a STR or related information is being or has been submitted to the FIU.

licensingno-tipping-off-vasps-and-their

❓60%

Internal Process: VASPs must establish internal procedures for identifying, assessing, and reporting suspicious transactions, including the appointment of a designated AML/Compliance Officer.

licensinginternal-process-vasps-must-establish

❓60%

Duration: All records, including customer identification data, account files, business correspondence, and records of transactions, must be maintained for a period of at least six (6) years after the business relationship is terminated or after the transaction is completed.

licensingduration-all-records-including-customer

❓60%

Accessibility: Records must be maintained in a manner that allows for rapid retrieval by the FIU or other competent authorities upon request.

licensingaccessibility-records-must-be-maintained

❓60%

Types of Records: This includes records of all fiat and virtual asset transactions, including sender and recipient information, amounts, dates, and relevant wallet addresses, as well as the underlying CDD documentation.

licensingtypes-of-records-this-includes

❓60%

Internal Controls and Procedures: Develop and implement internal policies, procedures, and controls to prevent and detect ML/TF.

licensinginternal-controls-and-procedures-develop

❓60%

Appointment of an AML/Compliance Officer: Designate a senior officer responsible for the VASP's AML/CFT program and for liaising with the FIU.

licensingappointment-of-an-amlcompliance-officer

❓60%

Employee Training: Provide ongoing AML/CFT training to all relevant employees, ensuring they are aware of their obligations and can recognize suspicious activities.

licensingemployee-training-provide-ongoing-amlcft

❓60%

Independent Audit: Establish an independent audit function to test the VASP's AML/CFT system and policies.

licensingindependent-audit-establish-an-independent

❓60%

Sanctions Screening: Implement systems to screen customers and transactions against national and international sanctions lists (e.g., UN Security Council Resolutions).

licensingsanctions-screening-implement-systems-to

❓60%

Travel Rule: As per FATF guidance, regulated VASPs will likely be required to implement the "Travel Rule" for virtual asset transfers, meaning they must obtain and transmit originator and beneficiary information for transactions above a certain threshold.

licensingtravel-rule-as-per-fatf

[primary] Financial Transactions Reporting Act No. 6 of 2006

(10 more unverified fact(s) )

AML/KYC Requirements

❓40%

Capital Requirements: No specific capital thresholds for VASP operations.

amlcapital-requirements-no-specific-capital

[primary] Financial Transactions Reporting Act No. 6 of 2006

❓40%

AML/KYC Requirements (Specific to VASPs): No specific AML/KYC regulations are tailored for VASPs under a licensing framework. However, any entity operating in Sri Lanka would still be subject to general anti-money laundering and combating the financing of terrorism (AML/CFT) laws, such as the Financial Transactions Reporting Act No. 6 of 2006 (FTRA), if their activities fall within the scope of "financial institutions" or "designated non-financial businesses and professions (DNFBPs)" and trigger reporting obligations for suspicious transactions. The applicability to purely virtual asset businesses without fiat gateways is a grey area in the absence of explicit VASP definitions in the FTRA.

amlamlkyc-requirements-specific-to-vasps

[primary] Financial Transactions Reporting Act No. 6 of 2006

❓40%

Reference: Financial Transactions Reporting Act No. 6 of 2006 (Note: This is a general AML/CFT law, not specific to VA licensing).

amlreference-financial-transactions-reporting-act

[primary] Financial Transactions Reporting Act No. 6 of 2006

❓40%

Local Presence: While no specific VASP license mandates local presence, any company wishing to operate legally in Sri Lanka, regardless of its business type, would need to comply with the Companies Act No. 07 of 2007, which typically involves local incorporation or registration as an overseas company branch.

amllocal-presence-while-no-specific

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

Travel Rule

❓60%

For domestic transfers between VASPs: Information must be collected and transmitted for transactions equal to or exceeding LKR 150,000 (approximately USD 470-500, depending on the current exchange rate).

travel-rulefor-domestic-transfers-between-vasps

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

For cross-border transfers between VASPs: Information must be collected and transmitted for all transactions, with no de minimis threshold.

travel-rulefor-cross-border-transfers-between-vasps

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

For transfers to/from unhosted wallets (private wallets): VASPs must also conduct due diligence and risk assessments, regardless of the amount, and collect relevant information to the extent possible, especially for higher-risk transactions.

travel-rulefor-transfers-tofrom-unhosted-wallets

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Exchange between virtual assets and fiat currencies.

travel-ruleexchange-between-virtual-assets-and

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Exchange between one or more forms of virtual assets.

travel-ruleexchange-between-one-or-more

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

travel-rulesafekeeping-andor-administration-of-virtual

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

travel-ruleparticipation-in-and-provision-of

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Collect and maintain specific information on both the originator and beneficiary of a virtual asset transfer.

travel-rulecollect-and-maintain-specific-information

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Originator Information: Name, Virtual Asset Account Number (or wallet address), physical address (or national identity number/passport number/customer identification number), and the specific virtual asset (e.g., Bitcoin, Ethereum) and amount.

travel-ruleoriginator-information-name-virtual-asset

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Beneficiary Information: Name, Virtual Asset Account Number (or wallet address), and the specific virtual asset and amount.

travel-rulebeneficiary-information-name-virtual-asset

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Transmit this information to the beneficiary VASP (or to the originator VASP in the case of an incoming transaction) immediately and securely with the transaction.

travel-ruletransmit-this-information-to-the

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Verify the accuracy of the collected information.

travel-ruleverify-the-accuracy-of-the

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Implement robust record-keeping systems to store transaction data and originator/beneficiary information for at least five years.

travel-ruleimplement-robust-record-keeping-systems-to

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Monitor transactions for suspicious activity and report such activities to the FIU.

travel-rulemonitor-transactions-for-suspicious-activity

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Conduct due diligence on customers (KYC) and implement risk-based AML/CFT controls.

travel-ruleconduct-due-diligence-on-customers

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Fines: Significant monetary penalties for institutions and individuals.

travel-rulefines-significant-monetary-penalties-for

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Imprisonment: For individuals found guilty of serious offenses.

travel-ruleimprisonment-for-individuals-found-guilty

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Suspension or Revocation of Licenses/Registrations: The FIU or other regulatory bodies may suspend or revoke the operating license or registration of a non-compliant VASP.

travel-rulesuspension-or-revocation-of-licensesregistrations

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Reputational Damage: Public disclosure of non-compliance can severely damage a VASP's reputation.

travel-rulereputational-damage-public-disclosure-of

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

FIU Directive No. 01 of 2023 on AML/CFT Obligations for Virtual Asset Service Providers (VASPs):

travel-rulefiu-directive-no-01-of

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Financial Transactions Reporting Act No. 6 of 2006:

travel-rulefinancial-transactions-reporting-act-no

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Prevention of Money Laundering Act No. 5 of 2006:

travel-ruleprevention-of-money-laundering-act

[primary] fiusrilanka.gov.lk — DIR 01 2023 VA VASPs [primary] fiusrilanka.gov.lk

❓60%

Similar to the FTRA, this is a foundational act.

travel-rulesimilar-to-the-ftra-this

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

(4 more unverified fact(s) )

Tax Reporting

❓60%

Not Legal Tender: Virtual currencies (VCs) are not recognized as legal tender in Sri Lanka.

taxnot-legal-tender-virtual-currencies

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Unregulated: VCs are not regulated by the CBSL and operate without any regulatory oversight or safeguards.

taxunregulated-vcs-are-not-regulated

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Illegal for Payments: The CBSL has prohibited regulated financial institutions from facilitating transactions involving VCs. This means VCs cannot be used for payments within Sri Lanka and engaging in such transactions carries significant risks.

taxillegal-for-payments-the-cbsl

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

No Licensing: No entity or company is authorized or licensed to operate, offer, or sell VCs, or provide services related to VCs (e.g., exchanges, brokers, miners) in Sri Lanka.

taxno-licensing-no-entity-or

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Risks: The CBSL highlights risks such as high volatility, financial losses, illicit financing (money laundering and terrorism financing), and data security risks.

taxrisks-the-cbsl-highlights-risks

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

CBSL Press Release - Warnings on Virtual Currencies (August 10, 2021): https://www.cbsl.gov.lk/en/node/3313

taxcbsl-press-release---warnings

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

CBSL Press Release - Public Warning on the Use of Virtual Currencies (July 11, 2022): https://www.cbsl.gov.lk/en/node/3592

taxcbsl-press-release---public

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

No Specific Framework: Sri Lanka's Inland Revenue Act No. 24 of 2017 outlines capital gains tax (CGT) primarily for the realization of "investment assets," which are defined to include land, buildings, and specified shares/securities.

taxno-specific-framework-sri-lankas

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Cryptocurrency is Not Recognized: Since cryptocurrency is not legally recognized as an investment asset, property, or security by the government or the CBSL, there is no specific capital gains tax framework applicable to gains derived from virtual assets.

taxcryptocurrency-is-not-recognized-since

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Current CGT Rate (General): Where CGT applies to recognized assets, it's typically levied at a rate of 10%. However, this does not extend to cryptocurrency due to its unregulated status.

taxcurrent-cgt-rate-general-where

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

No Specific Guidance: The Inland Revenue Department (IRD) has not issued any specific guidance on how profits from cryptocurrency trading, mining, staking, or other related activities should be treated for income tax purposes.

taxno-specific-guidance-the-inland

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Illegal Activities: Since the CBSL deems cryptocurrency activities (especially for payments or through unregulated entities) as being outside the legal framework, it creates an ambiguous situation for taxation. It's generally challenging to tax income derived from activities that are not legally recognized or are deemed illicit.

taxillegal-activities-since-the-cbsl

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Theoretical Consideration (Highly Speculative): In a hypothetical scenario where an individual or business derives significant fiat profits from crypto activities and these profits enter the formal financial system, the IRD could potentially attempt to tax it under general provisions for "income from business" or "other income." However, this is entirely speculative and lacks specific legal backing for crypto. Without explicit definition of crypto as a taxable asset or activity, such a pursuit would be legally contentious.

taxtheoretical-consideration-highly-speculative-in

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

No Specific Treatment: Value Added Tax (VAT) in Sri Lanka applies to the supply of goods and services. Since cryptocurrency is not recognized as a good, service, or financial instrument, there is no specific VAT treatment for cryptocurrency transactions.

taxno-specific-treatment-value-added

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Current VAT Rate (General): The general VAT rate in Sri Lanka is 18%. However, without a legal definition or recognition, applying VAT to crypto transactions is not possible.

taxcurrent-vat-rate-general-the

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Financial Services Exemption: Even if it were considered a financial service (which it is not by definition), traditional financial services can sometimes be exempt from VAT. But again, crypto lacks this formal classification.

taxfinancial-services-exemption-even-if

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

No Crypto-Specific Reporting: Due to the absence of specific tax legislation for virtual assets, there are no explicit reporting requirements for individuals or businesses regarding their cryptocurrency holdings, transactions, or gains/losses to the Inland Revenue Department.

taxno-crypto-specific-reporting-due-to

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

General AML/CFT Requirements: While there are no tax reporting requirements, the Financial Intelligence Unit (FIU) of Sri Lanka (which operates under the CBSL) is responsible for combating money laundering and the financing of terrorism (AML/CFT). Financial institutions (banks, money changers, etc.) are obliged to report suspicious transactions.

taxgeneral-amlcft-requirements-while-there

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

If an individual or business attempts to convert significant amounts of crypto profits into fiat currency and deposit it into the traditional banking system, and the source of these funds is unclear or linked to unregulated activities, it could trigger AML/CFT reporting obligations by the banks. This could lead to investigations into the source of funds.

taxif-an-individual-or-business

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

None Existing: As of my last update, Sri Lanka does not have any crypto-specific tax legislation. The government's and the CBSL's focus has been on issuing warnings and preventing the use of cryptocurrencies, rather than integrating them into the tax or regulatory framework.

taxnone-existing-as-of-my

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Future Possibilities: While there have been occasional discussions about exploring new technologies, the regulatory and legal environment regarding virtual assets remains extremely cautious and restrictive. Any future legislation would likely first address the legality and regulatory oversight of virtual assets before any tax framework could be established.

taxfuture-possibilities-while-there-have

[primary] cbsl.gov.lk [primary] cbsl.gov.lk [primary] fiusrilanka.gov.lk [primary] https://www.www.ird.gov.lk/ [primary] www.ird.gov.lk

❓60%

Inland Revenue Department of Sri Lanka: https://www.www.ird.gov.lk/ (For general tax laws and updates)

taxinland-revenue-department-of-sri

[secondary] Example: Ceylon Today article quoting CBSL [secondary] News First article [primary] Legislation.gov.lk (Official Government Legislation Repository) [primary] Legislation.gov.lk (Official Government Legislation Repository) [primary] Example of CBSL mention of digital payments/CBDC

(1 more unverified fact(s) )

Custody Requirements

Custody regulation data collection in progress.

Stablecoin Regulation

❓60%

Not Classified as E-money/Payment Tokens: The CBSL has explicitly stated that virtual currencies (VCs), which include stablecoins, are not considered "e-money" under the Payment and Settlement Systems Act, No. 28 of 2005. Therefore, entities involved in stablecoin activities are not authorized or licensed by the CBSL to operate as payment service providers.

stablecoinnot-classified-as-e-moneypayment-tokens

❓60%

Not Classified as Securities (Explicitly): While the Securities and Exchange Commission of Sri Lanka (SEC) is the regulator for securities, there has been no explicit classification of stablecoins as securities by the SEC. However, depending on their specific structure and how they are offered, certain stablecoin arrangements could potentially fall under the definition of a "security" if they represent an investment contract or other instrument defined in the Securities and Exchange Commission of Sri Lanka Act, No. 19 of 2021. This is a theoretical possibility rather than an explicit ruling.

stablecoinnot-classified-as-securities-explicitly

❓60%

De Facto Classification: Unregulated/High-Risk Assets: In practice, stablecoins are viewed by Sri Lankan regulators as unregulated digital assets that pose high risks to users and the financial system.

stablecoinde-facto-classification-unregulatedhigh-risk-assets

❓60%

Reserve Requirements: No requirements are imposed on stablecoin issuers for holding reserves.

stablecoinreserve-requirements-no-requirements-are

❓60%

Issuer Licensing: There is no licensing regime for stablecoin issuers in Sri Lanka. Any entity issuing stablecoins would be operating outside the formal regulatory perimeter.

stablecoinissuer-licensing-there-is-no

❓60%

Redemption Rights: There are no legally mandated redemption rights for stablecoin holders enforceable in Sri Lanka, as the assets are not recognized or regulated.

stablecoinredemption-rights-there-are-no

❓60%

The CBSL has published consultation papers and discussions around a "Proposed Road Map for Sri Lanka's Digitalization Strategy" which includes exploring a digitalized Sri Lankan Rupee.

stablecointhe-cbsl-has-published-consultation

❓60%

The CBSL views a potential e-Rupee as a safe, sovereign-backed alternative to private digital currencies, aiming to leverage the benefits of digitalization while mitigating the risks associated with private cryptocurrencies like stablecoins.

stablecointhe-cbsl-views-a-potential

❓60%

The CBSL sees its CBDC as a tool to enhance financial inclusion, reduce transaction costs, and improve the efficiency of payment systems, all within a regulated and secure environment, contrasting sharply with its stance on private stablecoins.

stablecointhe-cbsl-sees-its-cbdc

❓60%

Central Bank of Sri Lanka (CBSL) Public Notice on Virtual Currencies (February 2022):

stablecoincentral-bank-of-sri-lanka

❓60%

Content: Explicitly states VCs (including stablecoins) are not legal tender in Sri Lanka, are unregulated, and warns against associated risks (volatility, financial losses, illicit activities, cyberattacks). Advises the public not to use or invest in VCs.

stablecoincontent-explicitly-states-vcs-including

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Reference: Central Bank of Sri Lanka, "Cautions Public on the Use of Virtual Currencies (VCs)," Public Notice, February 23, 2022.

stablecoinreference-central-bank-of-sri

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Payment and Settlement Systems Act, No. 28 of 2005:

stablecoinpayment-and-settlement-systems-act

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Content: This Act defines and regulates "e-money" and payment systems in Sri Lanka. The CBSL's stance is that stablecoins do not fall under this definition and are therefore not regulated under it.

stablecoincontent-this-act-defines-and

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Reference: Payment and Settlement Systems Act, No. 28 of 2005.

stablecoinreference-payment-and-settlement-systems

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URL: Legislation.gov.lk (Official Government Legislation Repository)

stablecoinurl-legislationgovlk-official-government-legislation

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Securities and Exchange Commission of Sri Lanka Act, No. 19 of 2021:

stablecoinsecurities-and-exchange-commission-of

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Content: This Act governs the securities market in Sri Lanka. While it provides the legal framework for classifying financial instruments as securities, there is no explicit guidance classifying stablecoins under this Act.

stablecoincontent-this-act-governs-the

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Reference: Securities and Exchange Commission of Sri Lanka Act, No. 19 of 2021.

stablecoinreference-securities-and-exchange-commission

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Central Bank of Sri Lanka (CBSL) - Proposed Road Map for Sri Lanka's Digitalization Strategy (for CBDC context):

stablecoincentral-bank-of-sri-lanka

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Reference: Central Bank of Sri Lanka, "Proposed Road Map for Sri Lanka's Digitalization Strategy" (Specific title and date may vary, search CBSL's publications for "Digital Rupee" or "CBDC").

stablecoinreference-central-bank-of-sri

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URL: You would typically find this in the official CBSL publications section. For example, a search on the CBSL website for "digital currency" or "e-rupee" often yields relevant reports/statements. Example of CBSL mention of digital payments/CBDC

stablecoinurl-you-would-typically-find

[primary] fiusrilanka.gov.lk — Circulars [primary] cbsl.gov.lk — Public Is Warned Against The Use Of Virtual Currencies [primary] cbsl.gov.lk — Public Warning Regarding The Use Of Virtual Currencies [primary] fiusrilanka.gov.lk — PMLA%20No%205%20of%202006 [primary] fiusrilanka.gov.lk — FTRA%20No%206%20of%202006 [primary] fiusrilanka.gov.lk — Laws [primary] fiusrilanka.gov.lk — Circulars [primary] cbsl.gov.lk — Public Is Warned Against The Use Of Virtual Currencies [secondary] un.org — Un Sc Consolidated List [primary] home.treasury.gov — Specially Designated Nationals And Blocked Persons List Sdn Human Readable Lists [secondary] sanctionsmap.eu

(2 more unverified fact(s) )

Securities Classification

Securities classification data collection in progress.

Sanctions & Restrictions

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UN Consolidated Sanctions List: This is the de facto list implemented by Sri Lanka. It includes individuals and entities designated under various UN sanctions regimes (e.g., ISIL (Da'esh) & Al-Qaida, Taliban, DPRK, Iran, Libya, Somalia, Sudan, Yemen, DRC, Central African Republic, South Sudan).

sanctionsun-consolidated-sanctions-list-this

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The FIU of Sri Lanka issues circulars and maintains a public section on its website regarding these lists.

sanctionsthe-fiu-of-sri-lanka

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FIU of Sri Lanka (Circulars & Notifications): https://www.fiusrilanka.gov.lk/circulars.php (Check for specific regulations or gazettes implementing UN sanctions lists).

sanctionsfiu-of-sri-lanka-circulars

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Press Release (2021): The CBSL reiterated that "Virtual Currencies are not regulated in Sri Lanka, and therefore there is no regulatory oversight or safeguards relating to the usage, holding or trading of VCs in Sri Lanka." It advises against dealing in them, citing high risks for users.

sanctionspress-release-2021-the-cbsl

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Central Bank of Sri Lanka Press Release (22 November 2021): "Public is warned against the use of Virtual Currencies" https://www.cbsl.gov.lk/en/news/public-is-warned-against-the-use-of-virtual-currencies

sanctionscentral-bank-of-sri-lanka

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Earlier Press Release (2018): "Further, the public is informed that any person or entity using/operating/trading VCs in Sri Lanka would be doing so at their own risk."

sanctionsearlier-press-release-2018-further

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Central Bank of Sri Lanka Press Release (29 January 2018): "Public Warning regarding the Use of Virtual Currencies" https://www.cbsl.gov.lk/en/news/public-warning-regarding-the-use-of-virtual-currencies

sanctionscentral-bank-of-sri-lanka

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Prevention of Money Laundering Act, No. 5 of 2006: https://www.fiusrilanka.gov.lk/docs/Laws-and-Regulations/PMLA%20No%205%20of%202006.pdf

sanctionsprevention-of-money-laundering-act

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Financial Transactions Reporting Act, No. 6 of 2006: https://www.fiusrilanka.gov.lk/docs/Laws-and-Regulations/FTRA%20No%206%20of%202006.pdf

sanctionsfinancial-transactions-reporting-act-no

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United Nations Act, No. 45 of 1968: (Not readily available as a direct public URL from official Sri Lankan government sites, but is the enabling legislation for UN resolutions. It can typically be found in legal databases or requested from the Ministry of Justice.)

sanctionsunited-nations-act-no-45

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United Nations (Financial and Other Measures) Regulations No. 1 of 2012 (under UN Act): (This gazette implements UNSCR 1373, an example of how the UN Act is used. Check the National Gazettes for precise link.)

sanctionsunited-nations-financial-and-other

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FIU Sri Lanka - Laws and Regulations: https://www.fiusrilanka.gov.lk/laws.php

sanctionsfiu-sri-lanka---laws

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FIU Sri Lanka - Circulars & Notifications (for UN Sanctions Lists): https://www.fiusrilanka.gov.lk/circulars.php

sanctionsfiu-sri-lanka---circulars

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Central Bank of Sri Lanka - Public Warning on Virtual Currencies (2021): https://www.cbsl.gov.lk/en/news/public-is-warned-against-the-use-of-virtual-currencies

sanctionscentral-bank-of-sri-lanka

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UN Consolidated Sanctions List: https://www.un.org/sc/suborg/en/sanctions/un-sc-consolidated-list

sanctionsun-consolidated-sanctions-list-httpswwwunorgscsuborgensanctionsun-sc-consolidated-list

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OFAC Specially Designated Nationals (SDN) List: https://home.treasury.gov/policy-issues/financial-sanctions/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists

sanctionsofac-specially-designated-nationals-sdn

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EU Consolidated Sanctions List: https://www.sanctionsmap.eu/

sanctionseu-consolidated-sanctions-list-httpswwwsanctionsmapeu

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

(10 more unverified fact(s) )

Enforcement Actions

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Regulator Name: Central Bank of Sri Lanka (CBSL), Financial Intelligence Unit (FIU)

enforcementregulator-name-central-bank-of

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Entity Targeted: The general public and financial institutions in Sri Lanka, as well as any individuals or entities considering or engaging in virtual asset services. Violation Type: Operating outside the regulated financial framework; promoting/engaging in high-risk, unregulated investments; dealing in non-legal tender. Penalty Amount: No specific monetary penalty associated with this advisory itself. The "penalty" is the declaration of illegality/unregulated status and the implied risk of legal action under existing financial or criminal laws if related to fraud or money laundering.

enforcemententity-targeted-the-general-public

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Date: 2021-07-28 (Issued a press release)

enforcementdate-2021-07-28-issued-a-press

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Outcome: Heightened public awareness of the CBSL's prohibitive stance. Discouragement of engagement with cryptocurrencies and virtual asset service providers (VASPs). Reiterated that VASPs are not licensed or regulated by CBSL.

enforcementoutcome-heightened-public-awareness-of

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Significance: This was a strong and clear warning, setting the tone for the country's approach to virtual assets. It emphasized that crypto falls outside the existing regulatory perimeter, making any related activities high-risk and potentially illegal under broader financial laws.

enforcementsignificance-this-was-a-strong

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Central Bank of Sri Lanka Press Release: https://www.cbsl.gov.lk/en/news/fiu-statement-on-the-use-of-virtual-currencies

enforcementcentral-bank-of-sri-lanka

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Violation Type: Continuing to engage with or facilitate virtual asset transactions, despite previous warnings, and engaging in activities outside the regulatory framework. Penalty Amount: No specific monetary penalty. The "penalty" remains the official declaration of their unregulated status and the potential application of broader financial or criminal laws for illicit activities.

enforcementviolation-type-continuing-to-engage

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Date: 2022-04-12 (Issued a press release)

enforcementdate-2022-04-12-issued-a-press

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

❓60%

Outcome: Reiteration of the prohibitive stance. Further clarification that facilitating or promoting cryptocurrencies is a violation of current foreign exchange regulations (especially related to outward remittances for crypto purchases) and payment laws.

enforcementoutcome-reiteration-of-the-prohibitive

[primary] cbsl.gov.lk — Fiu Statement On The Use Of Virtual Currencies [primary] cbsl.gov.lk — Cbsl Reiterates Its Warning On The Use Of Virtual Currencies

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Significance: This further solidified the CBSL's position, clarifying that not only are cryptocurrencies unregulated, but engaging in transactions involving foreign exchange for crypto can violate the country's stringent foreign exchange laws. This acts as a stronger deterrent for financial institutions.

enforcementsignificance-this-further-solidified-the

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