The International Monetary Fund (IMF) has reported that cryptocurrency adoption in Nepal grew significantly between 2019 and 2024 despite a legal ban, with inflows peaking at over 13% of GDP in 2021. In a new report, the IMF urged Nepalese authorities to establish a regulatory framework aligned with international standards to safeguard financial stability and prevent capital control evasion. An expert noted that trading and remittance use cases keep crypto active in banned markets, making regulation a more effective tool than prohibition.
The International Monetary Fund (IMF) has flagged growing cryptocurrency adoption in Nepal despite a legal ban, urging authorities to monitor the sector closely. In a report released Tuesday, the IMF stated that flows of stablecoins and unbacked crypto assets grew markedly between 2019 and 2024.
Crypto inflows were negligible in 2020 but topped $2.6 billion in 2021, briefly exceeding 13% of Nepal’s GDP. Volumes fell to roughly 4% of GDP by 2023 before climbing back toward 8% in 2024, with stablecoins making up the larger share. The IMF wants a regulatory framework aligned with international standards, stating it “would help safeguard financial stability and integrity and consumer protection, while limiting circumvention of capital controls or large-scale deposit outflows.”
Musheer Ahmed, founder of Finstep Asia, told that the ban-versus-regulate debate starts with a category error. “The technology is not regulated. The use cases may be regulated,” Ahmed said, adding that countries where crypto is banned are still exploring tokenization.
Ahmed said the persistent use cases, such as trading and remittances, are exactly the ones worth regulating. He argued that “on the trading front, it does make sense to bring in regulations” for consumer and investor protection.
The IMF has spent years pressing governments to rein in crypto, most visibly El Salvador. The Fund insists El Salvador’s government buying stopped, though President Nayib Bukele claimed the nation still buys one Bitcoin daily and said, “No, it’s not stopping…..it won’t stop now, and it won’t stop in the future.”
Blockchain data shows El Salvador’s wallets growing by roughly 1 BTC daily. Ahmed noted the real traction is in payment rails, “especially the stablecoin sandwich, which has gained significant traction.”
The IMF’s warning comes as Nepal rebuilds from September’s Gen Z protests, which toppled the government. The unrest erupted after the government banned 26 social media platforms, leading tens of thousands to download the decentralized app Bitchat.
The Fund said it will keep engaging Nepal through post-financing assessment and annual consultations. Crypto oversight is now firmly on the agenda for the nation’s financial authorities.
