# IMF Urges Nepal to Monitor Crypto Despite Ban

**Published:** 2026-06-12T12:00:21.811Z  
**Topic:** El Salvador Bitcoin  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/7989fc88-0694-4a16-a846-513cd6ad43cc

The IMF urged Nepal to regulate cryptocurrency flows as adoption grew between 2019 and 2024 despite a nationwide ban on trading and mining.

The International Monetary Fund has urged Nepali authorities to establish a regulatory framework for cryptocurrency, warning that digital asset flows have grown markedly since 2019 despite a nationwide prohibition. According to the IMF’s 2026 Article IV Consultation, crypto inflows peaked above 13% of GDP in 2021, driven largely by stablecoins and cross-border payments [1].

**Key takeaways**
*   Crypto inflows in Nepal peaked at over 13% of GDP in 2021, exceeding $2.6 billion despite a legal ban enacted that year [1].
*   The IMF recommends Nepal implement regulations aligned with international standards to mitigate risks to financial stability and capital controls [2].
*   Stablecoins represent a growing share of crypto activity, which climbed toward 8% of GDP in 2024 after dropping to 4% in 2023 [1].
*   An expert suggests regulating specific use cases like trading and remittances rather than maintaining a blanket prohibition on the technology [1].

## Flows surge despite 2021 prohibition
Nepal banned all crypto transactions in 2021, with the central bank declaring trading, mining, and related activities illegal [1]. However, IMF staff calculations indicate that inflows were negligible in 2020 before surging to more than $2.6 billion in 2021 [1]. This volume temporarily exceeded 13% of the country's GDP before falling to roughly 4% by 2023 and climbing back toward 8% in 2024 [1]. The Fund noted that stablecoins comprise an increasing portion of these flows, estimating crypto-related cross-border activity at roughly 5% of GDP in early 2025, a figure higher than Bangladesh or Myanmar but significantly lower than Vietnam [1].

## Calls for regulatory alignment
The IMF warned that unregulated crypto activity could enable the circumvention of capital controls and trigger large-scale deposit outflows [2]. Consequently, the Fund advised Nepal to implement a regulatory framework that aligns with international standards to safeguard financial stability, integrity, and consumer protection [2]. The report also urged the completion of a Financial Action Task Force action plan to help Nepal exit the watchdog's grey list [1]. Musheer Ahmed, managing director of Finstep Asia, argued that regulation should target specific use cases like trading and remittances, which often persist even in banned markets, rather than applying a blanket ban on the technology [1]. He noted that the "stablecoin sandwich" has gained significant traction in payment rails [1].

## Why it matters
The IMF's recommendations arrive as Nepal navigates political changes following protests last year that toppled the Oli government and installed an interim administration [1]. The Fund stated it will continue engaging with Nepal through post-financing assessments and annual consultations, adding crypto oversight to its agenda for future discussions [2]. Establishing oversight is viewed as a critical step for the country to strengthen governance and meet international compliance benchmarks [2].

## Sources
1. Decrypt — [IMF Urges Nepal Monitor Crypto as Usage Rises Despite Ban](https://decrypt.co/370738/imf-urges-nepal-monitor-crypto-as-usage-rises-despite-ban)
2. Gncrypto — [IMF Urges Nepal to Regulate Rising Crypto Flows](https://www.gncrypto.news/news/imf-urges-nepal-regulate-rising-crypto-flows/)
3. Crypto — [IMF urges Nepal to tighten crypto oversight as flows persist](https://crypto.news/imf-urges-nepal-to-tighten-crypto-oversight-as-flows-persist/)

---
Cite as: TrendWatcher, "IMF Urges Nepal to Monitor Crypto Despite Ban", https://www.trendwatcher.in/article/7989fc88-0694-4a16-a846-513cd6ad43cc