SEC targets ‘smartphone generation’ with plans for regulated Digital Assets

• SEC Chief asserts younger demographics prefer the seamless, digital-first experience offered by global crypto platforms, which currently operate outside Sri Lanka’s regulatory safety net
• Says current methods used in the stock market is not digitised enough for Gen Z and Gen Alpha
• Says exploring possibilities of implementing digital assets in Sri Lanka

By Nishel Fernando

Prof. Hareendra Dissabandara Pic by Kithsiri de Mel

The Securities and Exchange Commission of Sri Lanka (SEC) has announced plans to introduce a regulatory framework for “Digital Assets,” aiming to capture the growing interest of tech-savvy youth who are currently gravitating towards unregulated cryptocurrency platforms due to the lack of modern investment alternatives in the local market.

During a media conference held in Colombo yesterday, SEC Chairman Prof. Hareendra Dissabandara highlighted a generational shift in investment behaviour, noting that “Generation Alpha” and “Generation Z” - who were “born with smartphones and the internet” - find the traditional stock market infrastructure cumbersome and outdated.

He observed that these younger demographics prefer the seamless, digital-first experience offered by global crypto platforms, which currently operate outside Sri Lanka’s regulatory safety net.

“There is a reason for this. The method we use in the stock market is not digitised enough for them. To open a CDS account you need one app, to trade you need another... these things need to be streamlined,” Prof. Dissabandara admitted, emphasising that the regulator must modernise to remain relevant to the next generation of investors.

Clarifying the regulator’s stance, the Chairman drew a sharp distinction between “Digital Currency” and “Digital Assets.” He explicitly stated that while the regulation of digital currencies (cryptocurrencies) falls under the purview of the Central Bank of Sri Lanka, the SEC is exploring the regulation of “Digital Assets,” such as investment tokens.

“We are looking at whether we can implement digital assets in Sri Lanka... not digital currency that is the Central Bank’s work. We are studying digital tokens,” he said, adding that an effective regulatory framework is currently being developed to facilitate this transition safely.

The move is part of SEC’s broader 12-point transformation plan, which includes enabling an effective risk management system to counter cyber security threats inherent in digital markets. By creating a regulated environment for digital assets, the SEC aims to offer a safer alternative for young investors who are currently taking significant risks on unregulated platforms.