A quiet but powerful financial shift is taking root across Sri Lanka. As inflation bites and the rupee continues to lose ground, a growing number of citizens from tech savvy youth to small business owners are turning to crypto currencies in search of value and stability outside the formal banking system.
A recent study in the South Asian Journal of Finance estimates that more than 320,000 Sri Lankans currently hold some form of crypt ocurrency, while international data provider Datawallet projects this number could rise to 1.16 million by 2026.
For many, digital currencies have become more than speculative bets; they are viewed as shields against inflation and currency depreciation.
“Young professionals and small investors are quietly exploring crypto as a way to preserve value,” noted a Colombo based financial analyst. “It’s happening under the radar beyond banks and the stock market but it’s growing every day.”
Most of these transactions take place on offshore exchanges or peer to peer trading platforms, as Sri Lanka has yet to license any local crypto service providers.
This means the activity exists in a regulatory grey zone, unrecognised by law and beyond the Central Bank’s protective reach.
The Central Bank of Sri Lanka (CBSL) has repeatedly warned the public against the risks of virtual currencies.
Governor Nandalal Weerasinghe recently reaffirmed that only the Sri Lankan rupee is legal tender. “We are not banning crypto holdings,” he clarified, “but we must ensure transparency and prevent misuse. No one should believe crypto is a safe investment.”
To strengthen oversight, the CBSL has proposed amendments to the Financial Transactions Reporting Act (FTRA), requiring virtual asset service providers (VASPs) to register with the Financial Intelligence Unit (FIU).
Once approved, these amendments will bring crypto intermediaries under anti money laundering and counter terror financing (AML/CFT) supervision, forcing them to report suspicious or large transactions just as banks do.
Meanwhile, the global crypto market has surged to record highs. Bit coin, the world’s largest crypto currency, is trading around US$109,000, up 62.7 percent since late 2024.
Analysts predict it could reach $150,000 before the end of 2025, buoyed by regulatory reforms in the United States and rising institutional interest.
Yet, Sri Lankan investors remain exposed. Without domestic legal recognition, victims of hacked wallets or collapsed offshore exchanges have little recourse. “If your crypto vanishes, you have no protection under Sri Lankan law,” cautioned a financial lawyer.
Despite the warnings, crypto’s rise mirrors a growing public desire for financial autonomy amid economic uncertainty.
Whether Sri Lanka chooses to regulate digital assets or leave them underground will determine if this quiet revolution becomes a legitimate part of the nation’s financial future or a cautionary tale of unchecked risk.
