IMF Flags Rising Crypto Flows in Nepal Under Existing Trading Ban

TLDR

• Nepal banned crypto trading, mining, and related activities in 2021 nationwide.
• IMF data shows crypto inflows peaked at $2.6B in 2021, exceeding 13% of GDP.
• Crypto volumes dropped in 2023 to around 4% of GDP before rebounding later.
• Stablecoins now form a growing share of Nepal’s cross-border crypto activity.
• IMF urges Nepal to align regulations with global standards and monitor flows closely.

International Monetary Fund urged Nepal to monitor crypto activity as usage rose despite an existing nationwide ban on transactions and financial risks and market monitoring. The IMF report showed rising stablecoin flows and unbacked crypto growth between 2019 and 2024 inside Nepal’s economy, according to global reports. Officials warned that increasing cross-border crypto activity requires closer oversight under global financial monitoring standards and policy oversight.

Nepal Crypto Activity Expands Under Existing Restrictions

Nepal banned all crypto transactions in 2021 after the central bank declared trading and mining illegal nationwide in the country’s national borders. Despite this restriction, IMF data showed crypto inflows surged sharply during 2021 compared with previous years, according to the IMF data over the prior baseline.

In 2021, inflows reportedly exceeded $2.6 billion, temporarily crossing 13% of Nepal’s GDP according to IMF calculations in updated figures in revised estimates. By 2023, volumes declined to around 4% of GDP before recovering again in later reporting periods in later revisions in economic terms.

Stablecoins accounted for a larger share of activity as crypto usage patterns shifted across cross-border channels across payment channels in cross-border flows. Early 2025 estimates placed Nepal’s crypto-related flows near 5% of GDP, above some regional peers in South Asia relative to peers.

Authorities maintained that enforcement actions continued against illegal trading platforms and unlicensed operators in Nepal, with regulatory actions across exchanges. The central bank reiterated that all crypto trading, mining, and related services remain prohibited under law under Nepal law and regulations.

IMF Calls for Stronger Oversight of Nepal Crypto Flows

The IMF stated that rising crypto activity in Nepal requires closer monitoring to protect financial stability and financial safeguards for stability goals. It added that regulatory frameworks should align with international standards to limit illicit financial flows for compliance goals under IMF guidance.

The Fund reported that stablecoin usage has grown faster than unbacked crypto in recent years over recent years within emerging markets. It also warned that cross-border transfers could challenge existing capital control measures in Nepal in Nepal context across the region.

IMF officials linked Nepal’s case to broader regional trends across South Asia and nearby markets in developing economies. They noted that enforcement gaps allow continued use of digital assets despite formal prohibitions in enforcement systems.

The IMF will continue Article IV consultations with Nepal under its ongoing monitoring framework through surveillance programs under the review cycle. Officials confirmed crypto oversight remains part of discussions in the latest review cycle in ongoing talks with authorities.

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