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IMF Warns Nepal About Rising Crypto Use Despite Ban

Even with the ban, crypto keeps growing in Nepal. The IMF is pushing for stricter rules to help curb capital flight and financial risks.

By Mike Hesp
• 2 min read
IMF Warns Nepal About Rising Crypto Use Despite Ban

Key Takeaways

  • Nepal has seen a sharp rise in crypto transactions despite the 2021 crypto ban, with a peak in 2021 above 13% of GDP.
  • The IMF wants Nepal to put in place a regulatory framework that follows international standards to strengthen financial stability, consumer protection, and capital controls.
  • Nepal Rastra Bank is exploring a CBDC and plans pilot tests for 2026, while stablecoins are taking a bigger share of crypto use.

Nepal is dealing with a notable increase in crypto transactions despite a legal ban that has been in place since 2021. According to a recent report from the International Monetary Fund (IMF), crypto flows in Nepal grew significantly between 2019 and 2024, with a peak in 2021 that topped 13% of gross domestic product (GDP). The IMF is therefore urging Nepal to develop a regulatory framework that lines up with international standards to protect financial stability and limit the risk of capital flight.

Crypto Adoption and Legal Restrictions in Nepal

Even though Nepal banned all crypto transactions in 2021 and the central bank declared trading, mining, and related activities illegal, the use of cryptocurrencies like stablecoins and unbacked tokens kept growing. Crypto inflows were barely anything in 2020, but they jumped to more than $2.6 billion (€2.3 billion) in 2021. After dropping to around 4% of GDP in 2023, volume rose again to about 8% in 2024. These numbers show that the ban has not been able to stop adoption, with stablecoins taking up an increasingly large share.

Call for Regulation and International Cooperation

The IMF says a proper regulatory framework is essential for protecting financial integrity and consumers, while also helping prevent the bypassing of capital controls and large deposit outflows. The IMF is also urging Nepal to finish the Financial Action Task Force action plan and get off the gray list. These recommendations come amid broader regional trends, with neighboring countries like India and Bangladesh also seeing fast crypto adoption growth. At the same time, Nepal Rastra Bank is looking into developing a Central Bank Digital Currency (CBDC), with pilot tests planned for 2026, which could point to a shift toward digital currencies.

Why This Matters for European and International Crypto Developments

The situation in Nepal shows the challenges countries face when trying to regulate crypto in a ban-based environment. For European and international market participants, it is an example of how trading and remittances can keep crypto activity alive, even in countries with strict bans. This highlights the importance of thoughtful regulation over a pure ban, since oversight can help reduce risks and improve transparency in the crypto market.

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