Nowadays, cryptocurrency is a global trend, and Bitcoin stands tall among the rest. Bitcoin is the first decentralized digital currency whose application around the world attracts as a revolutionary means of changing the traditional financial system. But in Nepal, trading Bitcoin is explicitly prohibited. In this blog post I will see how the Bitcoin ban affects businesses and individuals in Nepal.
1. Getting to understand the Bitcoin Ban in Nepal
Despite this, the Nepal Rastra Bank (NRB), the government of Nepal, has attempted to intervene and is filing criminal cases against Bitcoin and other cryptocurrencies. In 2017, the NRB notified businesses that are dealing in cryptocurrencies including Bitcoin if a trading is illegal. Further, in 2021 the government ramped up its antipathy toward crypto users, claiming they use them for money laundering, fraud, and tax evasion, and thus making this decision stronger.
The government's position on Bitcoin is primarily rooted in the following concerns:
- Lack of Regulation: As Bitcoin is a decentralized currency it’s hard for authorities to monitor or regulate transactions.
- Potential for Financial Crimes: Transaction fees on the payment system can be used to funnel money to suspected tax evaders.
- Economic Stability: The government has concerns that these cryptocurrencies could threaten the country's financial stability if people began to invest their savings into them.
2. Involving individuals and the ways the Ban will affect them.
Implications of bitcoin ban in Nepal falls benefits to persons who were engaged in crypto space and that renders the bitcoin significant for them.
a. Lost Investment Opportunities
Bitcoin was an opportunity for many tech savvy Nepali citizens to invest and make profits in a global market. But the ban has left many buyers without the chance to invest, therefore losing an opportunity to gain money. If you get caught in cryptocurrency trading, you’ll get in trouble and that can be fines or even full imprisonment.
b. Impact on Remittances
The nation of Nepal is heavily dependent on the remittances of citizens who are working abroad, remittances which contribute a great deal to the nation's economy. The international money transfers could be made faster and cheaper using cryptocurrencies like Bitcoin. Since the ban has been in place, Nepali workers abroad have to use traditional banking channels, which can be slow and expensive.
The blockchain technology landscape includes cryptocurrencies, but also has many other uses. Banning Bitcoin may also simultaneously hinder the emergence of blockchain innovation in Nepal, which could otherwise be used to solve local problems in finance, healthcare and supply chain management.
3. The Effect of the Ban on Businesses
The Bitcoin ban is also taking its toll on Nepali businesses, especially startups. Here’s how:
a. Blockame Church rules against blockchain startups
Indirectly, Bitcoin ban affects those businesses that want to delve into blockchain technology. As Bitcoin and blockchain are, more or less, one and the same, so following that the bad press around cryptocurrencies has also lead to bad press around blockchain technology. This means that Nepali startups thinking about blockchain solutions may now find it tough to secure funding or partnerships.
b. Limited access to Global markets
Nowadays, many businesses all over the globe have started to accept Bitcoin as a means of payment. While this trend is available to benefit from, Nepali businesses are, unfortunately, unable to utilise this opportunity because the ban prevents them from taking advantage of a global customer base that prefers to use cryptocurrencies.
c. Indemnity to Fintech Development
The growth of fintech is all across the world and cryptocurrencies are playing a major role in its growth. If Nepal bans Bitcoin it would not only be closing an important technology gap, it would put the country at a significant disadvantage compared to its counterparts in the fintech world. There are long term economic implications of this, with neighboring countries like India and China poking into ways of crypto regulation, rather than banning it.
4. Impact on the Nepali Economy
The Bitcoin ban in Nepal not only affects individuals and businesses but also has broader economic implications:
a. Reduced Foreign Investment
If the industry pursued its path, it could potentially snub out foreign investments from cryptocurrency firms wishing to capitalise on markets outside Asia. A ban spells out that the country will not be open to innovation in its digital finance space, which could scare off investors.
b. Loss of Talent
The ban might prompt Nepali tech enthusiasts and blockchain developers to migrate to other countries that have better crypto friendly rules. This is a brain drain affecting the tech industry, which is barely established.
5. Are There Any Alternatives?
With the current legal landscape leaving it unclear, what are the options available to Nepali individuals and businesses which want to partake in digital asset related activity?
a. Exploring Blockchain with a Without Cryptocurrency
It’s banned, of course, but Bitcoin is not: blockchain technology might have other uses. Blockchain use cases are not limited to the world of cryptocurrencies, and can be applied in the case of Nepali entrepreneurs by digital supply chain management, digital identity verification, secure data storage, etc.
b. Learning from Other Countries
Countries such as India, where regulators are considering a middle path between ban and regulation, may be what Nepal should consider. Nepal that can take advantage of the benefits of blockchain technology but shield itself from the dangers of cryptocurrencies, can do so only through enacting clear regulations.
6. Future of Bitcoin in Nepal
Regardless, the following position stands firm with the Nepali government, but there was always the chance it would shift in the future. The growing interest in cryptocurrencies from around the globe could soon lead Nepal to revisit its policies.
a. Central Bank Digital Currencies (CBDCs) The Rise
Several countries are looking at Central bank digital Currencies (CBDCs) as a safer and government regulated alternative to cryptocurrencies. Nepal should look into this alternative to the benefit of digital currencies, without the risk involved in decentralized assets like Bitcoin.
b. Requirements for Regulatory Frameworks
If the Nepali population starts to take to the blockchain, the demand for the government to reexamine its position may grow. Perhaps finding a middle ground between regulation and the ability to innovate would be a better approach.
Without doubt, the ban of Bitcoin in Nepal has affected people, businesses and economy as a whole. The government has valid concerns about financial crime and economic stability, but the outright ban may not be the most effective way to go about it. A regulatory framework with a fine balance between innovation and oversight may be the way forward for Nepal to capitalize from the positives of blockchain technology keeping security intact.
Meanwhile as the world has started to prefer digital currencies and blockchain technology, it remains to be seen what will be the fate of Nepal — will it move with the times or will it continue to stay true to its ways. However, until that time, individuals as well as businesses in Nepal will have to steer through the process of living in a digital finance landscape that is shifting.
What are your thoughts on the Bitcoin ban in Nepal? Do you think the government should regulate instead of banning it? Share your views in the comments below!
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