IMF Urges Nepal to Regulate Crypto as Usage Rises

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

• Crypto inflows in Nepal peaked at over $2.6 billion in 2021, exceeding 13% of GDP, despite a ban on trading and mining [1].
• The IMF recommends Nepal replace its prohibition with regulations aligned with international standards to curb illicit flows and protect consumers [1].
• Stablecoins represent a growing share of crypto activity, with cross-border flows estimated at 5% of GDP in early 2025 [1].
• An expert suggested that regulating use cases like trading and remittances is more effective than banning the technology [1].

Flows surge despite 2021 prohibition

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].

IMF pushes for international standards

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