Cryptocurrency, which is also known as "Crypto," is one of the most popular virtual and digital currencies all over the world. It is secured by cryptography, which accepts peer-to-peer deals without including third parties. Due to its decentralized structure, it doesn't have to depend on any central authority, such as a banking institution or government body.
Although cryptocurrency is popular and accepted in numerous countries, Nepal still considers crypto and its mining as illegal in the country, and those who do its deals there are punished by the country. Not only that, but also those who promote or encourage others to trade in cryptocurrency are also punishable according to the prevailing law.
What do Nepali laws say about cryptocurrency deals in Nepal?
The Nepal Rastra Bank published a notice on Jestha 29, 2076, where it clearly mentions that trading bitcoin without taking authorization from the Nepal Rastra Bank is strictly banned due to the Nepal Rastra Bank 2058 Act and the Foreign Exchange Act of 2019. In the notice, they mention that bitcoin is not a currency, and according to those two acts, legal status and a license have to be attained to carry out foreign currency exchange transactions. But Nepal Rastra Bank didn't consider it currency, so there was no chance of making it legal. This notice was announced without proper research. After a period of time, they again issued a notice in which they extended the ban on cryptocurrency and mentioned that each person from Nepal, including sightseers and guests, is strictly banned from trading cryptocurrency.
Why is cryptocurrency illegal in Nepal?
Even though cryptocurrency has lots of benefits, Nepal considers it illegal. There are numerous reasons for banning crypto in Nepal, such as the overflow of Nepali currency into foreign currencies. If the Nepali government legalizes cryptocurrency, then there will be huge numbers of crypto traders in Nepal, which will lead to a high chance of outflows of Nepali currency to foreign markets. It will be hard for the Nepali government to control the trading of crypto, which will lead to an economic crisis. Due to the high volatility of crypto in the market, there is a high risk of loss, which also leads to an economic crisis in Nepal. There is a high chance of getting scammed by fraud in crypto. So, to protect its citizens from getting scammed or taking the country out of the economy, it is the responsibility of the Nepal government. Therefore, this is the main reason for prohibiting or making cryptocurrency illegal in Nepal.