Sri Lanka's Cabinet has endorsed a new legal framework to oversee virtual assets and service providers, aiming to manage risks in the country's growing digital asset sector.

The Cabinet of Ministers has given approval to a proposal establishing a comprehensive regulatory framework for virtual assets and virtual asset service providers (VASPs). The initiative, presented by President Anura Kumara Dissanayake in his role as Minister of Digital Economy, represents a significant step toward formalizing government oversight of the nation's expanding cryptocurrency and digital asset market.

The proposed legal framework is designed to address mounting concerns around the use of virtual assets and aims to reduce exposure to financial crimes. As digital currencies and blockchain-based assets gain popularity among Sri Lankan users, authorities have identified the need for structured regulations to ensure consumer protection and systemic stability.

The approval signals the government's commitment to developing a more sophisticated regulatory environment for the virtual asset sector while maintaining oversight capabilities. The framework is expected to provide clearer guidelines for both service providers operating in the space and individuals engaging in virtual asset transactions.