Ban of Transaction of Bitcoin and other cryptocurrencies in Nepal.
The central bank of Nepal, Nepal Rastra Bank (“NRB”) published a notice pursuant to Nepal Rastra Bank Act 2001 (“NRB Act”) and Foreign Exchange (Regulation) Act 1962 (“FERA”) prohibiting the usage of Bitcoin in Nepal. NRB has not recognized Bitcoins as a valid currency in Nepal.
A few highlights on the ban:
- Laws of Nepal: Nepal Rastra Bank, the Central Bank of Nepal in its statement banning Bitcoin and its transactions has cited two laws, the foreign exchange act of 2019 BS and then NRB act of 2058 BS. Basically, it says that you can’t have bitcoin transaction in Nepal or use bitcoin to exchange foreign or Nepali currency, because bitcoin is not classified as a currency by Nepal Government, and hence using the internet for bitcoin transactions or exchange is illegal.
- Lack of regulations: NRB and Nepal govt is unable to have proper regulation over bitcoin transactions, as it’s mostly done over internet and Nepal doesn’t yet have the technology needed to regulate it, and hence it may be banned.
- Use in illegal activities: Reports of bitcoin being used for money laundering or making black money into white by converting into Bitcoin, among other cases is another reason.
- Damage to Nepali economy: Bitcoin transactions unlike other banking transactions can’t be taxed, so there will be loss of revenue, plus if more Nepalis use bitcoins, the monetary system of Nepal may be affected, Bitcoin is also a very volatile currency with lots of ups and downs and long term it can cause severe problems. NRB is tasked with maintaining the financial stability of Nepal and maybe it felt, bitcoin was a threat.
These are just some reasons I feel, is why bitcoin is banned in Nepal. The Nepali laws as it currently stands don’t allow it, plus the central bank feels that bitcoin can’t be properly regulated, can be used in illegal activities and long term may damage Nepali economy. Recently, strong action has been taken by Nepal govt against bitcoin transactions, including arresting people involved in mining bitcoin, having large amounts of bitcoin, Nepal’s largest bitcoin exchange operator Bitsewa shut down and its owners arrested, even one Nepali politician from a minor party was also arrested for bitcoin trading.