Sri Lanka Should Tokenize Its Treasury Bills Before Anything Else

Almost every Wednesday the government borrows billions through ten dealers and a Rs 5 million minimum bid. Here’s how that market works, who it shuts out and what a token would change.

At 11 a.m. on a Wednesday, bidding closes on Sri Lanka’s most important market. It happens almost every week.

The market is the Treasury bill auction, where the government borrows short term money to keep running. On 23 September 2026 it sold Rs 60 billion of bills in a single auction, paying 9.20% for three months and 9.93% for a year (EconomyNext). Over the whole of 2026, the Public Debt Management Office plans to issue about Rs 5.5 trillion of bills, counting rollovers (Annual Borrowing Plan 2026).

The bidders are ten primary dealers, plus a few designated institutions such as the Employees’ Provident Fund (Annual Borrowing Plan 2026). The minimum bid is Rs 5 million, roughly US$15,000 (PDMO auction notice). Everyone else buys from a dealer or a bank, on whatever terms that counter sets.

Now look at who isn’t in the room. In 2025, 311,190 Sri Lankans left the country for work (SLBFE data via The Morning). Workers abroad sent home a record US$8.08 billion that year (EconomyNext, citing CBSL). That money pays school fees at home and props up the rupee. A worker in Doha who wants to lend some of it to the government can do it. It takes a special bank account, a dealer’s forms and whatever minimum that dealer picks.

Most tokenization pitches start with land, tea or startups. I think Sri Lanka should start with the Treasury bill and this piece is the case for it.

Why the Treasury bills and not land or tea

Tokenizing an asset means recording who owns it on a shared digital ledger, as a token that can move between phone wallets the way a digital dollar does. The borrower and the debt can stay the same. What changes is the infrastructure used to record, transfer and settle ownership and some rules have to be updated to match.

For most assets, that’s the hard part. For a Sri Lankan T-bill, most of the work is already done. Four reasons:

The bill is already a database entry. Sri Lankan government securities are scripless, held in a central depository and settled electronically (CBSL). Tokenizing land means sorting out deeds and titles first. Tokenizing a T-bill means changing where an existing record lives.

The law already leaves a door open. The Public Debt Management Act of 2024 says domestic debt is issued “by way of auction… or any other market based mechanism” (section 16(1)). It also lets the Finance Minister designate, by gazette, a depository “to electronically issue scripless securities” and record their ownership (section 31(10)) (Act №33 of 2024). Whether a blockchain can be that depository is a question for lawyers. But the Act doesn’t need rewriting before someone asks it.

It came through the worst test Sri Lanka has had. When the government restructured its domestic debt in July 2023, the only Treasury bills it converted were the ones held by the Central Bank (Ministry of Finance). Bills held by everyone else weren’t touched.

The issuer says it wants new buyers. After an IMF–World Bank mission reviewed the primary dealer system in January 2026, the debt office listed “broadening and diversifying the investor base” as a priority for the year (Annual Borrowing Plan 2026).

Nobody has to trust a new asset here. Only a new way of holding an old one.

How a Sri Lankan buys a T-bill today

There are three doors and each one is narrower than it looks.

The auction. Primary dealers bid, along with designated institutions like the EPF. The public can only bid through a dealer. Bids close at 11 a.m. on auction day and the minimum is Rs 5 million plus multiples of Rs 1 million. In January’s auction, bills settled two days later. The January 2026 notice lists the ten dealers by name and phone number (PDMO).

The dealer’s counter. Retail investors buy on the secondary market from a primary dealer or a licensed bank (CBSL) and every counter has its own rules. Bank of Ceylon starts at Rs 10,000 face value and takes applications by email, fax or at a branch, as long as they arrive before noon. If you want out early, your bills “will be discounted at the prevailing market rates” (Bank of Ceylon). Capital Alliance offers online sign up with a Rs 500,000 minimum or Rs 50,000 by direct debit (CAL).

The diaspora door. A Sri Lankan working abroad (but not an emigrant) can open an Inward Investment Account and use it for government securities (DFCC). Commercial Bank’s non-resident page lists a Rs 500,000 minimum (ComBank). And total non-resident holdings of T-bills are capped at 5% of what’s outstanding (CBSL).

None of this is broken and it has improved. Online sign-ups exist now. But look at what a small investor ends up holding.

The counter problem

A retail investor in Sri Lanka doesn’t hold a T-bill in a market. They hold it at a counter.

The price you get on the way in and the way out is one dealer’s quote. You can’t see what the next person paid. You can’t hand the bill to your sister, or sell it to a stranger who’d pay more, without going back through the counter. And the counter keeps banking hours.

That’s the problem tokenization fixes. Speed and technology are side effects. The main change is that a counter becomes a market.

What a tokenized T-bill would be

There are two ways to build one and the choice matters more than the blockchain.

Wrapped. A company buys real bills, holds them with a custodian and issues tokens that each claim one bill. This is how most tokenized US stocks work and how Etherfuse puts Mexican government bills on Solana. It’s fast to launch. But what you hold is a claim on a company that holds the asset, not the asset itself.

Government-issued. The debt office issues the token itself and the government’s registry tracks every unit. The Philippines took this route. Its Treasury issued one year tokenized bonds in November 2023, with a ledger “running in parallel with the National Registry of Scripless Securities, with the latter serving as the primary registry” (Philstar).

Sri Lanka should go government-issued and copy the Philippine setup. During a pilot, the existing depository stays the authoritative legal record. The token ledger runs next to it and is reconciled against it. The Act already assumes this: until the Minister designates a new depository, the Central Bank’s existing registry “shall continue to be in operation” (section 31(10)). Only later, once the pilot has earned it, should the law recognise the ledger itself as the record of ownership.

The reason is trust. After the 2022 default and a string of crypto scams, a saver needs to know the token was issued by the government and is matched one-to-one in the official registry, with no private company in between. The rule the US SEC wrote into its new tokenization exemption applies here too: a token must carry the same rights as the security it represents (SEC). A tokenized T-bill should pay the same, rank the same and be repaid the same as a bill held in the depository today.

What changes for the people at the counter

The minimum becomes a software setting. The Philippines distributes Treasury bills through the PDAX exchange from ₱500 (Ledger Insights). Etherfuse’s smallest unit is worth one Mexican peso. It chose Solana first because “we wanted to make it possible to buy the smallest unit… and have it still have value” after fees (Solana Foundation). A Rs 1,000 T-bill is a product decision, not a technical one.

Selling stops depending on one dealer. A token could trade between approved, identity-checked investors on a regulated digital marketplace, at prices everyone can see, instead of relying on one dealer’s exit quote. Dealers still matter, as market makers competing on quotes instead of owning the exit.

Settlement gets faster. Today an auction settles in two days. On a ledger, settlement could move toward near-real-time, or even have the bill and the payment move in one step. How close it gets depends on how the rupee side is connected, because the money still moves through banks.

The diaspora gets a phone-first door. The virtual assets concept paper presented in February 2026 already plans for digital KYC (Sunday Times). The same approach could let a worker in Riyadh open an investment account from their phone instead of a branch.

Proof becomes public. The number of tokenized bills outstanding would sit on a public ledger that anyone can check. If the debt office publishes one official token address, a fake “government bill” becomes much easier for investors and platforms to spot. It doesn’t make scams impossible, since websites and wallets can still be spoofed, but it gives everyone one thing to check.

Maturity is handled by the registry, not the wallet. On day 91, the token stops trading. The debt office redeems it against the official registry and pays the rupees into the holder’s linked bank account. Because every holder is identity-checked, a lost phone or lost key doesn’t mean a lost bill. Recovery goes through the regulated identity layer and a private key is never the only proof of ownership. This is the difference between tokenizing a security and just minting a coin.

To get a sense of scale, here’s a rough illustration, not a forecast. If 1% of 2025’s remittances had gone into T-bills, that’s about US$81 million. At the Central Bank’s 29 September exchange rates, that’s roughly Rs 26–27 billion (Newswire, citing CBSL), close to half of the Rs 60 billion auction on 23 September.

This has already been done in countries like Sri Lanka

The Philippines depends on remittances too. Its first tokenized bond sale drew P31.4 billion of demand for a P10 billion offer and the Treasury raised it to P15 billion at 6.5% (Philstar). That sale was for institutions. A year later the government moved to retail, distributing through the GCash wallet app, which reported 94 million users. The Finance Secretary wanted government bonds to be “a few swipes away” (Ledger Insights).

Thailand’s Cabinet approved the G-Token on 13 May 2025: 5 billion baht of government borrowing sold as digital tokens to small investors, starting “with as little as a few hundred baht,” according to the Finance Minister (The Nation).

Mexico’s bills reached global retail through a private company. Etherfuse launched its tokenized bonds at Solana Breakpoint 2023 in Amsterdam, for non-US retail investors. Its case study says customers came from 40 countries (Solana Foundation).

And the biggest borrower in the world is already on these rails. Tokenized US Treasuries stood at US$14.72 billion on 29 September 2026 (rwa.xyz). On 17 September the US SEC opened a five-year exemption for trading tokenized US stocks on-chain (SEC). These rails are being built whether Sri Lanka uses them or not.

What still stands in the way

This is where most proposals go vague. Here are five specific obstacles.

1. The law being written targets a different thing. Sri Lanka’s crypto rulebook moved fast in 2026. A virtual assets concept paper went to the national anti-money-laundering committee in February. The SEC and the Ministry of Digital Economy held a forum in June that discussed “tokenization of physical assets” and startups raising money through token issues (EconomyNext). In July, the Cabinet named the SEC as the regulator for virtual asset service providers (Daily FT). But the framework starts from anti-money-laundering and centres on registering, reporting on and taxing service providers (Sunday Times). The global standard it’s based on excludes “digital representations of… securities” from the definition of a virtual asset (FATF). So a tokenized T-bill should fall under debt law, not crypto law. That’s good news, but nobody has said it in writing yet. One clause in the new law would settle it.

2. The payment side has to stay in rupees. “The Sri Lankan Rupee is the legal tender in Sri Lanka,” the Deputy Finance Minister repeated in July, and foreign exchange rules bar residents from sending money abroad for crypto (Daily FT). Since 2021, Sri Lankan debit and credit cards can’t be used for “payments related to virtual currency transactions” (CBSL Direction №3 of 2021). So the token can move on-chain while the rupees move through banks, which is how the Philippine wallet model works.

3. Money from abroad hits a cap and carries currency risk. The 5% limit on non-resident holdings would need to go up for the diaspora door to matter at scale. Diaspora buyers should also be told plainly that a 9.93% yield in rupees is not 9.93% in riyals. On 29 September 2026 the Central Bank’s buying rate for a dollar was Rs 326.37 and the rupee was weakening (Newswire).

4. The counter is somebody’s business. Dealers and banks earn money by standing between the public and the auction. A pilot that cuts them out will lose, so it should give them the new jobs: distributors, market makers and wallet providers.

5. Sri Lankans have been burned by apps promising returns. In March 2023 a Colombo magistrate banned overseas travel for the directors of Onmax DT, over what the court called illegal trading of more than US$100 million in a pyramid scheme (Daily Mirror). To many people, a phone app that says “earn 9.9%” will look like the thing that took their money last time. The answer is a single official token address published on treasury.gov.lk and onboarding that carries the government’s name. Smooth design won’t fix trust on its own.

A pilot small enough to say yes to

Here’s what I’d propose.

• One 91-day bill, Rs 1 billion. That’s under 2% of a normal weekly auction, too small to disturb the market.
• Issued by the debt office under section 16(1). The existing depository stays the authoritative record, with a token ledger reconciled against it, as in the Philippine model.
• Distributed by two or three existing primary dealers, who handle KYC and rupee payments through normal bank accounts.
• Open to residents and Inward Investment Account holders, with a minimum no higher than Rs 1,000.
• The SEC confirms in writing that the token is a government security, not a virtual asset.
• On a public, low-fee chain. Solana is the obvious candidate, because tiny government bills already work there.

Then measure three things. How many holders are buying a government security for the first time? What share of the money comes from abroad? And what’s the typical ticket size? If the answers are “many,” “meaningful” and “small,” make it bigger.

Next Wednesday at 11 a.m., ten dealers will bid for Sri Lanka’s debt.

The people sending home US$8 billion a year won’t be in the room. With a token, they could be.

Nothing here is investment advice. All figures are as of 29 September 2026 unless stated otherwise. Yields and exchange rates change every week, so check the latest auction results before relying on any number here.