IMF urges Nepal to regulate crypto amid rising use

IMF urges Nepal to regulate crypto as usage rises despite a ban. Crypto inflows peaked at 13% of GDP in 2021, fell, then rebounded to 8% in 2024. Stablecoins drive activity. IMF warns of financial risks.

The International Monetary Fund (IMF) has raised concerns about the persistent and growing use of cryptocurrencies in Nepal, despite a nationwide ban on trading, mining, and related activities since 2021. IMF data shows that crypto inflows in Nepal reached over $2.6 billion in 2021, temporarily exceeding 13% of the country’s GDP. Although these volumes dropped to about 4% of GDP by 2023, they rebounded to nearly 8% in 2024. A significant portion of this activity involves stablecoins, largely driven by cross-border payments and remittances. The IMF has urged Nepal to establish a regulatory framework that meets international standards, warning that unregulated crypto activity could facilitate capital-control evasion, deposit outflows, and money laundering. Additionally, the IMF recommended an action plan to help Nepal exit the Financial Action Task Force (FATF) grey list. Despite strict prohibitions, crypto use persists, leading experts and the IMF to suggest that regulation may be more effective than outright bans in managing financial risks and protecting consumers.