Cryptocurrency Regulations in Nepal: Ban, Challenges & Future Outlook

In 2025, Nepal will still have one of the strictest regulations on cryptocurrency in all of Asia and will go against the trend of regulated adoption worldwide. All crypto activities-trade, mining, and payment-are illegal according to the NRB and government under the Foreign Exchange Regulation Act (2019).

Derives strict prohibition on crypto to safeguard its banking system predominantly reliant on remittances and traditional banking. As neighbors explore the efficacy of regulated crypto use, Nepal prefers state-controlled digital solutions, including its future central bank digital currency. Contradiction arises as tech-savvy youth are always keen to try their hands at blockchain technology, while they need to either work underground or limit themselves to government-approved projects. The prohibition has forced crypto activity underground while stifling innovation to what is permissible by the authorities.

Historical Context

Following threats to monetary control, NRB in 2017 instituted a blanket ban on cryptocurrencies, launching a crackdown in Nepal against cryptocurrencies. Further escalated enforcement occurred between 2022 and 2024 with actions taken by authorities against individuals for P2P trading and even alleged mining operations. As of 2025, the ban remains unchanged, though pressure is building as citizens increasingly use crypto for cross-border remittances in spite of the restrictions.

Current Regulatory Framework

Nepal enforces one of the world’s toughest cryptocurrency bans. The Nepal Rastra Bank (NRB) prohibits all crypto activities – trading, mining, and payments – under existing financial laws. Violations risk heavy fines and jail time.

Active observation is also placed on transactions from banks to online networks. The NRB works with the anti-money laundering unit to stop all crypto use, whether formal or informal, by targeting trading channels, reflecting Nepal’s commitment to controlling its financial system. Recent NRB circulars explicitly prohibit even indirect participation in cryptocurrency markets, including:

• Use of international exchanges via VPN.
• Crypto-related advertising or promotion.
• Acceptance of digital assets as payment.

Despite crackdowns, Nepalis still trade crypto secretly, especially for overseas money transfers. Authorities now monitor banks more closely and block crypto websites. Nepal’s 2025 rules remain firm, showing the government’s determination to control its financial system, even as crypto grows globally.

Nepal Crypto Policies

1. Strict Ban on Decentralized Cryptocurrencies

• All crypto trading, mining, and payments remain illegal.
• Enforced under Foreign Exchange Regulation Act (2019).
• Penalties include fines and imprisonment.

2. Government-Approved Digital Initiatives

• Digital Rupee (CBDC): Pilot testing underway for 2026 launch.
• Blockchain Projects: Used for land records and supply chains (no cryptocurrencies involved).
• $MOPH Token Proposal: Health Ministry’s Solana-based token plan (not yet approved by NRB).

3. Policy Priorities

• Total ban on private cryptocurrencies.
• Only allows state-controlled digital systems.
• No plans to legalize decentralized crypto.

Nepal’s Approach to Crypto Innovation

While maintaining its ban on decentralized cryptocurrencies, Nepal is selectively embracing blockchain technology through controlled initiatives. The Nepalese government is creating its own digital currency (CBDC) for testing in 2026 and testing blockchain for land records and health projects like the $MOPH token plan. The country wants blockchain’s advantages but keeps tight control, banning decentralized systems. Every project follows strict government rules, showing Nepal prefers centralized tech solutions.

Notable Challenges

Despite strict bans, Nepal faces significant hurdles in curbing cryptocurrency activity:

Key Challenges

• Remittance Riddle – Diaspora prefers cryptocurrency to make money transfers cheaper even if bans still apply. 
• Tech Gap – the local expertise is lacking for regulating cryptocurrencies with any changes in the policies. 
• Black Market Risks – There are P2P scams and frauds that thrive without oversight. 

Enforcement & Penalties

• 2024-25 Crackdowns: Over 50 arrests for crypto trading (DMLI Data).
• Bank Surveillance: Accounts frozen for crypto-linked deposits.
• VPN Restrictions: ISPs block major exchanges (Binance, KuCoin).

This enforcement-heavy approach creates unintended consequences, including driving activity underground while failing to address the technological demands of Nepal’s remittance-dependent economy.

Future Outlook

Nepal’s crypto ban shows no signs of lifting soon, with the NRB prioritizing its CBDC rollout over private cryptocurrencies. Global institutions like the IMF now advise Nepal to research crypto rules without fully legalizing it. Surveys show most young Nepalis want regulated cryptocurrency, creating tension with current bans. While keeping decentralized crypto illegal, Nepal’s digital currency plans and youth pressure might bring slow changes after 2026.

Conclusion

While Nepal has been very cautious about cryptocurrency. However, growing interest in blockchain technology and digital finance opens windows for gradual innovation in a regulated environment. The development of a digital rupee and the discovery for blockchain solutions show that Nepal is willing to modernize but in its own terms. 

As global trends evolve and domestic demand grows, the country may find ways to integrate secure, regulated crypto frameworks without compromising financial stability. For now, Nepal’s measured approach ensures stability while laying the groundwork for future-ready financial systems.

FAQs

1. Are crypto gifts or airdrops legal in Nepal?

No. The NRB considers receiving crypto through gifts or airdrops as unauthorized foreign exchange acquisition. Recipients could face penalties if discovered, though enforcement is challenging for small amounts.

2. Do Nepali banks allow deposits from crypto mining earnings abroad?

No. Banks must report and freeze any deposits suspected to originate from crypto activities under NRB directives. Even legitimate mining income from overseas is treated as illegal under foreign exchange laws.

3. Are there legal ways to invest in crypto as a Nepali citizen?

No. Even indirect investments (through foreign brokers or offshore accounts) violate the Foreign Exchange Act. The NRB has penalized citizens for using international platforms via VPNs.

4. How do Nepali freelancers receive crypto payments from abroad?

Most convert crypto to fiat via P2P networks or intermediaries, risking frozen bank accounts. Some use third-country payment processors, though this remains legally ambiguous.

5. Does Nepal’s ban include decentralized finance (DeFi) platforms?

Yes. DeFi platforms fall under the prohibition, as they enable crypto transactions. The NRB classifies them as unauthorized foreign exchange systems, regardless of their non-custodial nature.

6. Can tourists use cryptocurrencies in Nepal?

No. Businesses accepting crypto risk penalties, and exchanges are blocked. Tourists must use NPR or foreign currency (USD/INR) for all transactions.

7. Are NFTs considered illegal under Nepal’s crypto ban?

Yes. The NRB treats NFTs as crypto assets, banning their trade. However, enforcement remains inconsistent due to limited awareness about NFTs.

8. How do regulators track crypto transactions without blockchain expertise?

The DMLI collaborates with banks to flag suspicious transactions and monitors social media for P2P trading. ISPs also block known crypto exchange domains.

9. Could Nepal’s CBDC lead to future crypto legalization?

Unlikely. The digital rupee is designed as a centralized alternative, not a step toward legalizing private cryptocurrencies. The NRB emphasizes control over decentralization.

10. Why hasn’t Nepal considered regulated crypto zones like Dubai?

Nepal prioritizes monetary sovereignty and fears capital flight. With remittances fueling ~25% of GDP, the NRB avoids any system bypassing formal banking channels.