Cryptocurrency is not illegal in Sri Lanka but occupies a legal gray area as it is not recognized as legal tender or an asset class (1). The Central Bank of Sri Lanka has not authorized any businesses to operate cryptocurrency exchanges, mining operations, custody services, or advisory services related to digital assets (1). While investing in cryptocurrency has no explicit legal prohibition due to the absence of specific laws, using cryptocurrencies for transactions within Sri Lanka is not permitted (1).
The Central Bank has consistently warned the public about significant risks associated with cryptocurrency use and investment through multiple press releases issued since 2018 (1). Under Directions No. 03 of 2021 under the Foreign Exchange Act, electronic fund transfer cards such as debit and credit cards are prohibited from being used for cryptocurrency-related payments (1). The central bank emphasizes that cryptocurrencies are unregulated investment instruments with no regulatory safeguards, and complaints have shown that members of the public have incurred heavy losses and become victims of financial scams (1).
"The public is reminded that cryptocurrencies are unregulated investment instruments which are not recognized as an asset-class in Sri Lanka. Further, cryptocurrencies are not considered as legal tender in Sri Lanka and have no regulatory safeguards relating to their usage in the country."
Sri Lanka is planning to introduce regulations requiring cryptocurrency service providers to register with the Financial Intelligence Unit as part of international anti-money laundering and counter-terrorism financing requirements (2). The Financial Intelligence Unit was established in March 2006 under the Financial Transactions Reporting Act to combat money laundering and terrorist financing in line with international standards (2). After registration, virtual asset service providers must report all transactions conducted through virtual currencies similar to how banks operate under the country's AML/CFT regime (2).
Source:
https://www.cbsl.gov.lk/en/news/risks-of-using-and-investing-in-cryptocurrency-20230329
https://fiusrilanka.gov.lk
Last updated: 19-10-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.
