Authorities in Nepal have once again turned their attention to banning cryptocurrency-related activities. Nepal’s telecommunications regulator, also known as Nepal Telecommunications Authority (NTA), issued a notice to Internet Service Providers (ISPs) and email service providers in the country on January 8. In this, the NTA ordered them to ban access to all crypto-related websites, apps, or networks.
The Nepal Telecommunications Authority stated:
“The ISPs are directed to deactivate the accessibility to manage and use the website, apps, and online networks related to the financial crime.”
The statement also noted that the trading of virtual digital currency has increased recently and mentioned that cryptocurrency transactions are illegal in Nepal.
Instructions for this action have been given to all ISPs in Nepal. The motto is to prevent access to these digital currency platforms completely. Meanwhile, the regulator has warned of legal action against ISPs that violate the latest regulations.
In April 2022, the NTA issued a similar notice regarding crypto sites. The April notice also said that those involved in the crypto market would face legal action. However, no significant results could appear, and crypto services remained intact.
Nepal’s Crypto Growth And Restrictions
According to Chainalysis, despite the ban, Nepal’s cryptocurrency adoption is among the top 20 in the world, ranking 16th overall, ahead of the United Kingdom.
On the other hand, research published by the Law Library of Congress in November 2021 indicates that Nepal is one of the nine countries that have officially banned the mining and trading of cryptocurrency. Other countries that outlawed crypto include Iraq, China, Algeria, Morocco, Bangladesh, Tunisia, Egypt, and Qatar.
Nepal has always been against digital assets. The central bank of Nepal, the Nepal Rastra Bank(NRB), announced on August 13, 2017, that bitcoin transactions are illegal in Nepal. NRB specifically focused on Bitcoin and did not mention cryptocurrencies then.
In September 2021, the Nepal Rastra Bank banned cryptocurrency mining and trading in the country. The bank has warned people not to venture into the crypto space as they will face the Foreign Exchange Regulation Act 2019 if they do.
Moreover, in March 2022, the NTA came to the fore again when the Ministry of Communications and Information Technology issued a directive to shut down all crypto websites. Surya Prasad Lamichhane, NTA’s deputy director, has stated:
“The government has directed [us] to shut down the apps after carrying out an investigation.”
The Nepal Telecommunications Authority has also imposed tougher regulations following several arrests for online betting related to FIFA World Cup 2022 and cricket. The NTA has blocked gambling websites claiming they are not licensed to operate legally in Nepal.
The crypto market has always been prone to high unpredictability and volatility. Due to the rise of cryptocurrency scams and money laundering, some governments have decided it is better to ban digital currency transactions.
According to a report by Chainalysis, hackers siphoned off over $3 billion worth of cryptocurrency in 125 hacks between January and October 2022. In October 2022, hackers stole $718 million from DeFi protocols in 11 hacks. While the hackers hacked $2.1 billion in 2021.