📈 Sri Lanka Empowers SEC to Regulate Virtual Assets for Financial Modernization

Following its upgrade to an upper-middle-income economy, Sri Lanka is moving toward a resilient financial architecture by designating the Securities and Exchange Commission (SEC) as the official regulator for Virtual Assets and Virtual Asset Service Providers (VASPs). • Key Market Insights: • The nation has an estimated 420,000 digital asset users, driven by a young, tech-savvy population. • Regulation aims to transition unmonitored digital spaces into a structured framework aligned with Anti-Money Laundering (AML) standards. • Regulatory Objectives & Sector Impact: • Prioritizes retail investor protection, market integrity, and accountability against unmonitored platforms. • Establishes formal compliance baselines, requiring measures such as proof-of-reserves audits. • Boosts the broader ICT/BPM and digital commerce ecosystem by encouraging Tier-1 compliant platforms to operate safely within the national context. • Next Steps & Implementation: • Legislation is pending final drafting and legislative passage. • Long-term success relies on realistic licensing timelines and ongoing dialogue between regulators and global/local industry participants.