IMF urges Nepal to tighten crypto oversight; flows persist despite ban

The International Monetary Fund has urged Nepal to strengthen monitoring of crypto activity across its financial system. Digital asset flows continue despite a nationwide ban on trading and mining, prompting the IMF call.

Nepal imposed a full ban on crypto transactions in 2021 after the central bank classified them as illegal. Inflows increased that same year. IMF data showed inflows exceeded $2.6 billion in 2021, a figure that temporarily crossed 13% of Nepal's GDP based on revised calculations.

By 2023, crypto-related activity dropped to around 4% of GDP. The IMF reported renewed movement in later periods. Early 2025 estimates placed Nepal's crypto flows near 5% of GDP, higher than several regional peers.

Stablecoins became a larger part of transaction flows during this phase, the IMF said. Users shifted toward cross-border payment channels outside formal banking systems. Nepal's central bank maintained that all crypto trading and mining remain prohibited under national law. Authorities continued enforcement actions against illegal platforms.

The IMF linked the persistent flows to stablecoin usage and cross-border transfers. It said enforcement gaps allow continued use of digital assets despite legal bans. The fund warned that such flows can challenge existing capital control systems.

IMF officials noted that stablecoin activity has expanded faster than unbacked crypto in emerging markets. The report connected this trend to increasing use in payment settlements.

The IMF stated that Nepal needs stronger oversight of digital asset flows. It said financial stability requires tighter monitoring systems and improved compliance frameworks. IMF consultations with Nepal remain ongoing under Article IV review cycles. The fund said crypto oversight continues to form part of its monitoring discussions.