The IMF is warning that Nepal’s blanket ban on cryptocurrencies hasn’t stopped digital assets from flowing into the country — and it wants tighter oversight to close the gaps.
In a recent review, the International Monetary Fund tracked crypto activity in Nepal between 2019 and 2024 using revised economic estimates and financial surveillance data, and found a surprising trend: even after Kathmandu outlawed trading and mining in 2021, estimated inflows surged. That year saw inflows of roughly $2.6 billion, a sum that temporarily equated to about 13% of Nepal’s GDP under the revised calculations. Activity eased to around 4% of GDP by 2023 but showed renewed movement in later reporting periods, with early 2025 estimates near 5% of GDP — higher than several regional peers.
A key driver of these flows is stablecoins and their use in cross-border payments. IMF analysts say users have shifted toward payment channels outside formal banking systems, increasing the role of stablecoins relative to unbacked cryptocurrencies. These transfers often occur through unregulated networks, complicating surveillance and raising risks to capital controls and broader financial stability.
The IMF’s message to Nepal is clear: legal bans alone aren’t enough. The fund is urging authorities to strengthen monitoring systems, improve compliance frameworks, and tighten oversight of cross-border digital-asset flows to reduce the risks posed by unregulated channels. The report highlights that enforcement gaps and limited surveillance capacity in developing economies allow digital-asset use to persist despite prohibitions.
Nepal’s central bank has consistently reiterated that crypto trading and mining remain illegal, and authorities report ongoing enforcement actions against illicit platforms and coordination with international bodies on compliance measures. IMF consultations with Nepal are continuing under Article IV review cycles, and crypto oversight remains an active part of those discussions.
For the crypto community and policymakers, the Nepal case underscores a wider trend in emerging markets: stablecoins are increasingly important for cross-border payments, and prohibitions without robust monitoring and cross-border cooperation may not stop flows — they may simply push activity into less transparent channels.
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