By A Staff Reporter
Kathmandu, Feb. 14: Cryptocurrency has been declared illegal in Nepal by the government. However, the increasing global involvement in the digital currency sector has led several Nepalis to invest in and earn through it as well.
However, the government has no data on cryptocurrency users as such transactions are secure and the country doesn’t have digital infrastructures to track them.
Secure communication technique called cryptography is used in cryptocurrency transactions. The digital currency is produced through algorithm and block-chain technology.

The arrest of seven individuals from Kathmandu and Chitwan in October, 2017, by the Central Investigation Bureau (CIB) was the first incident where Nepalis were detained for allegedly running exchange business of Bitcoin, a decentralised digital currency.

After that, several individuals have been arrested over the years. In January, 2022, the Department of Revenue Investigation (DRI) filed a case against four family members living in Kathmandu on charge of bringing money through illegal transaction of cryptocurrency.

The case filed at the Kathmandu District Court against the family claims Rs. 376.4 million in penalty.
As of February, 2022, there are more than 10,000 cryptocurrencies – including Ethereum, Ripple or XRP, Litecoine, Monero, Dash, Zcash, Tether and Bitcoin Cash – in existence.
A report on cryptocurrency users across the world by the Singapore-based Cryptocurrency Payment Gateway Triple A stated that there are around 424,000 Nepalis engaged in cryptocurrency transactions.

“We are unaware of how many Nepalis are involved in cryptocurrency business. It is illegal as per the law and we are taking steps for its control,” said Gunakar Bhatta, spokesperson at the Nepal Rastra Bank (NRB), the central bank of Nepal.
According to Bhatta, investments in cryptocurrencies by Nepalis would affect the country financially unless the sector was legally regulated.

The CIB informed of keeping an eye on the transactions from Nepal to foreign destinations and vice-versa in a bid to prevent Nepalis from getting involved in the digital currencies. “The government has termed cryptocurrency illegal. We have been investigating by coordinating with experts as there are some technical challenges,” said Deputy Inspector General of Police (DIGP) Dhiraj Pratap Singh, director at the CIB.
DIGP Singh also added that they were in shortage of manpower and infrastructure to tackle the upgraded trend of digital crimes.

“Cryptocurrency network is secured digitally and we need technical minds to tackle it. We have not been able to keep pace with the trend of crimes,” said DIGP Singh.
The Ministry of Finance (MoF) also informed that a task force was formed under the leadership of the joint-secretary at the ministry’s Revenue Management Division.

“The task force consists of representatives from all concerned authorities including finance, economy and security,” said Ritesh Kumar Shakya, spokesperson for the MoF.
According to Shakya, the task force has been directed to prepare a report over the status of cryptocurrency users in Nepal and the digital currency’s challenge.

“Only a handful of countries have legalised cryptocurrency. Some are planning to bring laws for cryptocurrency regulation and legalise it. India is also moving forward to come to a decision on the digital currency. We will also move forward on the basis of the report by the task force,” said Shakya.
Nevertheless, Shakya suggested Nepalis to not invest or involve in cryptocurrency as long as it is illegal.

“Several Nepalis are also duped to invest in cryptocurrency. Public will only face loss while investing in something illegal. We request the people to abide by the law,” said DIGP Singh.
Nepalis living in foreign countries with cryptocurrency legalised have also been warned not to get involved in the business.

“It has also been found that Nepalis living abroad are luring those in Nepal to invest in cryptocurrency. Nepalis are barred from investing in cryptocurrency abroad as well and are liable for punishment as per the law,” said NRB spokesperson Bhatta.

Meanwhile, MoF spokesperson Shakya informed that the government was preparing to introduce mechanism to tackle cryptocurrency trade.
The NRB, government, private association of banks and security agencies have requested the public to not get involved in cryptocurrency.