IMF flags rising crypto adoption in Nepal despite ban, urges close monitoring

The International Monetary Fund (IMF) has issued a warning regarding the increasing use of cryptocurrencies in Nepal, even though they are legally prohibited. The organization urges Nepalese authorities to closely monitor the sector to protect financial stability and curb illegal financial activities.

The IMF's report highlighted a significant rise in the flow of stablecoins and unbacked crypto assets between 2019 and 2024. Despite Nepal's ban on cryptocurrency transactions, adoption has grown, though it remains modest compared to other countries. The fund stressed that a clear regulatory framework, aligned with international standards, is essential to safeguard financial stability, integrity, and consumer protection. Such measures would also help prevent the circumvention of capital controls and large-scale outflows of deposits.

“

Flows of stablecoins and unbacked crypto assets grew markedly between 2019 and 2024, although adoption remains modest relative to peers, despite legal prohibition on crypto transactions.

Despite the ban, law enforcement agencies in Nepal have frequently uncovered illegal crypto trading networks. Recent years have seen arrests of individuals involved in cryptocurrency trading, illegal investment schemes, and crypto scam call centers. Authorities have also dismantled major crypto rings operating in various parts of Kathmandu.

Separately, the IMF acknowledged Nepal's tangible progress in implementing reforms under its Extended Credit Facility program. This progress has supported economic recovery, maintained macroeconomic stability, built fiscal and external buffers, and protected vulnerable populations. The fund also commended recent efforts to strengthen oversight of savings and credit cooperatives (SACCOs), a sector previously marred by governance failures and financial irregularities.

“

The recently established National Cooperatives Regulatory Authority (NCRA) has begun developing a licensing regime, reporting requirements and regulatory standards for the sector.