The cryptocurrency world has raised dust around the global financial market; however, in Nepal, this is a different ball game. Nepal continues to ban Bitcoin - along with other digital currencies - as well. While trending in many parts of the world, the Nepalese government is not taking it lightly. But why? This post will walk you through why and where does the Bitcoin ban in Nepal come from and what impact does it have on this economy.
1. The Legal Landscape: Understanding the Ban
Ironically, despite being one of the most developed countries in the world, Nepal has taken a very strict view on cryptocurrencies and has deemed it illegal to buy or sell, or even to own, Bitcoin, as well as any other digital currency. Nepal Rastra Bank (NRB), the central bank of Nepal formally outlawed cryptocurrencies in the public notice they announced in August of 2017. According to the notice, Bitcoin trading and any crypto activity was not allowed under the "Foreign Exchange Act".
In Nepal, where the authorities have taken this law very seriously, law enforcement has raided and arrested people engaged in Bitcoin trading. Violators will be fined and imprisoned. Nepal is taking no prisoners when it comes to banning digital currencies and the way this strict enforcement should make it clear just how serious they are about this.
2. Concerns about Financial Stability.
A big reason for Nepal to ban Bitcoin is to safeguard its financial stability. Since the aim behind designing cryptocurrencies like bitcoin is to remove them from government control, they are decentralized by nature, and hence are unable to be controlled by traditional financial institutions like central banks. The government is afraid that allowing Bitcoin and other cryptocurrencies to freely enter the country could shake the economy in countries like Nepal, where the financial system is still taking shape.
Unregulated digital currencies might cause capital flight, or money flowing out of the country, and thus weaken nepal government’s financial reserves, the worried the Nepalese government. But cryptocurrencies’ anonymity also means it’s hard to track down, which may be why it’s been used, in some cases, as a method for tax evasion, money laundering and other illegal activities.
3. Help Preventing Scams and Protecting Consumers
In Nepal, there were their share of financial scams and the government is wary in anything that might be bad for its citizens. And the most important thing is that cryptos are highly volatile and regulated is not possible so if you lost money in scams or bad investment there’s no way to recover money. People were complaining to Nepalese authorities of getting cheated in Bitcoin schemes, with some who had promised high returns, fleeing with investors’ money.
The Nepalese government thinks banning cryptocurrencies will protect its citizens from these risks. As Bitcoin is that much more speculative than other investments, it worries that the average person in a country with still developing financial literacy may not grasp the risks of investing in something so speculative.
4. Digital Innovation from Nepal’s Viewpoint
The ban on Bitcoin does not prevent the country from being into digital innovation. Blockchain technology has received some interest from the government for use in several administrative processes. In areas like supply chain management, vote systems and public records, blockchain – the technology that powers cryptocurrencies – provides a secure and public way to transfer and store data.
However, theBlockchain technology and cryptocurrencies are not well connected, especially with government. But cryptocurrencies, without regulation, could prove too dangerous to the economy for the Nepalese authorities to benefit from blockchain. But they are open to discussing how technology can further enhance governance while not jumping on board with the adoption of decentralized digital currencies.
5. Is it Hope for the Future of Bitcoin in Nepal?
With the increasing adoption across the globe, the number of Nepalese citizens hoping these countries will come to change their stance as to cryptocurrencies is rising. Yet the Nepal Rastra Bank is sticking by its decision to keep the ban in place for now. They argue the financial system will get priority to guard its security and avoid hobbling consumers in case of harm.
The only legal way for those in Nepal who are Bitcoin enthusiasts to experience digital currencies has been to wait for regulatory reforms. By developing a regulatory framework that’s similar to countries like the United States or Japan, in which cryptocurrencies are permitted, but strictly regulated; some experts say that the future of legal Bitcoin trading might open up in Nepal.
6. Final Thoughts: Navigating the Ban
The ban on Nepal in Bitcoin has sent economists, tech enthusiasts and ordinary citizens arguing with each other. On the one hand, the government wants to safeguard its economy and its people from the risks. But critics say Nepal could lose out on economic benefits and innovation that cryptocurrencies can bring.
Until now, Nepal’s Bitcoin and other digital currencies enthusiasts must remain on guard. And while the risks associated with engaging in illegal Bitcoin transactions can be very real, the government has yet to make any indication that they’ll be lifting the ban any time soon. While the future is uncertain, one thing is clear: For the moment, the Nepalese government is not willing to risk its nation’s financial stability.
Key Takeaways
- Under the 'Foreign Exchange Act', Nepal has banned Bitcoin and all forms of cryptocurrency.
- The government is worried about financial instability, tax evasion and money laundering.
- The ban, they say, protects citizens from scams and financial loss.
- Nepal is keen to employ blockchain technology and less so on cryptos.
- However, the future of Bitcoin in Nepal is still uncertain until the government makes some regulations concerning Bitcoin and making the transaction flowing and safe.
It will be interesting to see the way Nepal will evolve with the changing economy. With the world evolving with digital currency, it is very likely that situationises of this developing country too will be changed as the technology advances further. The government is cautious for now because it wants to do anything that will improve the petroleum sector only when it is stable.