🧭 Why Is Cryptocurrency Banned in Nepal?

 

1. Strict Legal Framework

Nepal Rastra Bank (NRB) issued its first ban on cryptocurrency trading and use on August 13, 2017, citing the Foreign Exchange (Regulation) Act 1962.
In January 2022, the NRB expanded the ban to cover mining, investing, network marketing, and all virtual-currency–related activity.
By April 12, 2024, Nepal’s Penal Code was formally amended (Section 262A) to criminalize creation, sale, holding, and transfer of crypto—with penalties of up to 5 years imprisonment, fines, and asset seizure.

2. Protection of Foreign Exchange Reserves & Monetary Stability

Nepal’s economy is heavily dependent on remittances, which feed the country's foreign exchange reserves. Cryptocurrencies enable capital flight—bypassing official remittance systems—threatening economic stability and weakening the Nepali Rupee.

3. Lack of Regulatory Infrastructure

Nepal lacks both technological infrastructure and regulatory frameworks to properly oversee decentralized crypto networks. Without these, NRB sees crypto as too volatile, hard to track, and risky for public investors.

4. Fraud, Money Laundering & Scams

Central authorities fear cryptocurrency’s anonymity facilitates financial crimes. Past scams like HyperVerse targeted Nepali investors: many took loans to invest, lost their funds, and some even reported suicidal distress when unable to withdraw money.
Crypto’s linkage to money laundering and pyramid schemes has been cited repeatedly by regulators and financial watchdogs.

5. Penalties & Enforcement

Nepalese law levies serious consequences for crypto activities:

• Imprisonment: up to 3–5 years

• Fines: up to 3× the transaction value

• Confiscation of crypto assets and devices
  High-profile arrests, account freezes, and cyber raids are now common enforcement methods.

6. International Compliance

Nepal aims to maintain compliance with global standards like FATF. A strict ban helps align with anti-money-laundering (AML) and know-your-customer (KYC) norms.

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🌐 Despite the Ban: What’s Happening Underground?

• Peer-to-peer (P2P) trading still thrives via platforms like Binance P2P, backed by VPN use and covert bank transfers.

• Youth in urban areas are increasingly interested in DeFi, NFTs, and freelance crypto-related jobs—despite the risks.

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💬 Voices from Reddit and the Public Forum

Users on forums offer candid takes:

“They banned it because our foreign exchange laws don't allow virtual currencies… crypto is not classified as legal tender by the Nepal Government.”

“Dealing in crypto could lead to financial scams… money goes out in USD, which is already in tight supply.”

These grassroots views echo concerns about regulation gaps, scams, capital outflow, and economic vulnerabilities.

🧭 Conclusion: Ban or Regulate?

Nepal’s decision to ban crypto is rooted in:

• Protecting its fragile economy

• Avoiding financial crime

• Managing technological unpreparedness

But as technology evolves and global adoption rises, the question remains:
Should Nepal regulate crypto instead of banning it?

Let us know what you think!