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Despite a 2021 ban, crypto flows in Nepal hit $2.6 billion in 2021. The IMF now urges regulation to protect financial stability and curb illicit flows.
The International Monetary Fund has urged Nepal to establish a regulatory framework for cryptocurrency, citing a marked increase in digital asset flows despite a national prohibition [1]. In its 2026 Article IV Consultation report, the IMF noted that crypto inflows peaked above 13% of GDP in 2021, reaching $2.6 billion, before rebounding to nearly 8% of GDP in 2024 [1]. The organization warned that the current ban has driven activity underground, posing risks to financial stability and capital controls [3].
Key takeaways
Nepal Rastra Bank declared all crypto trading, mining, and related activities illegal in 2021 [3]. Despite this, IMF data indicates that flows of stablecoins and unbacked crypto assets grew significantly between 2019 and 2024 [1]. Crypto inflows were negligible in 2020 but exceeded $2.6 billion in 2021, briefly topping 13% of GDP [1]. While volumes fell to roughly 4% of GDP in 2023, they climbed back toward 8% in 2024, with stablecoins making up a larger and growing share [1]. The Fund estimates that Nepal's crypto-related cross-border flows stood at about 5% of GDP in early 2025, a figure higher than Bangladesh and Myanmar but significantly lower than Vietnam's estimated 26% [1].
The IMF argues that a complete ban has failed to stop activity and instead makes monitoring difficult, potentially driving it underground [3]. It warned that unregulated flows could be used to circumvent capital controls, facilitate illicit fund movements, and trigger large-scale deposit outflows from the formal banking system [3]. Consequently, the Fund urged Nepal to adopt a regulatory framework aligned with international standards to strengthen financial stability and consumer protection [1]. It also pressed the country to
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No, the central bank of Nepal declared mining, trading, and related crypto activities illegal in 2021.
The IMF has urged Nepal to implement a regulatory framework aligned with international standards to protect financial stability and curb illicit flows.
The halving event reduces the rate at which new Bitcoin is created, which in April 2024 resulted in an inflation rate lower than that of gold.
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Potential risks include developer error, future threats from quantum computing, and the possibility of other assets emerging as more compelling stores of value.