The International Monetary Fund has recommended that Nepal replace its blanket ban on cryptocurrencies with a regulatory framework aligned with global standards, citing a sharp rise in cross-border crypto inflows that have persisted despite legal prohibition. The recommendation appears in the IMF’s 2026 Article IV Consultation report, which assesses Nepal’s economic policies and financial stability risks.
According to the report, Nepal experienced a significant increase in stablecoin and uncollateralized crypto asset inflows between 2019 and 2024, even after the Nepal Rastra Bank declared all crypto trading, mining, and related activities illegal in 2021. The data shows that crypto inflows peaked at over $2.6 billion in 2021, exceeding 13 percent of Nepal’s gross domestic product. After declining to roughly 4 percent of GDP in 2023, inflows rebounded to approximately 8 percent in 2024, driven largely by stablecoins. As of early 2025, Nepal’s cross-border crypto inflows stood at about 5 percent of GDP, higher than comparable levels in Bangladesh or Myanmar but significantly lower than Vietnam’s estimated 26 percent.
The IMF’s analysis highlights several risks associated with Nepal’s current approach. A complete ban has not stopped crypto activity but has driven it underground, making it harder for authorities to monitor and control. The report warns that unregulated crypto flows can be used to circumvent capital controls, facilitate illicit fund movements, and potentially trigger large-scale deposit outflows from the formal banking system. The fund also stressed that the lack of a legal framework leaves consumers unprotected, exposing them to fraud, market manipulation, and platform failures with no recourse.
The IMF urged Nepal to adopt standards consistent with the Financial Action Task Force’s recommendations, likely including licensing requirements for crypto exchanges, know-your-customer and anti-money laundering obligations, transaction reporting thresholds, and consumer protection measures. The fund also pressed Nepal to complete its FATF action plan to secure removal from the organization’s greylist, a designation that can affect international banking relationships and investment flows.
For Nepal, the shift from prohibition to regulation could bring several benefits, including the ability to tax crypto transactions, more effective tracking of suspicious flows, and access to licensed exchanges with safeguards against theft and fraud. However, the transition will not be straightforward given Nepal’s relatively small and underdeveloped financial system and the need for regulators to build technical capacity to supervise digital asset markets. The IMF acknowledges these challenges but argues that the cost of inaction is higher.
