IMF Warns Nepal to Regulate Cryptocurrency Amid Ban

The International Monetary Fund (IMF) has urged Nepal to closely monitor cryptocurrency usage, despite a legal ban on crypto transactions in 2021. According to an IMF report, crypto inflows in Nepal grew from negligible amounts in 2020 to over $2.6 billion in 2021, briefly exceeding 13% of the country's GDP.

However, volumes fell to around 4% of GDP by 2023 before climbing back up to 8% in 2024, with stablecoins making up a larger and growing share. The IMF is calling for Nepal to establish a regulatory framework aligned with international standards, citing the need to safeguard financial stability and consumer protection.

Musheer Ahmed, founder of Finstep Asia, stated that countries where crypto is banned or heavily restricted are still seeing tokenization use cases involving real-world assets and traditional finance. He emphasized that regulating trading and remittances would be a more effective approach than prohibition.