Nepal Said No to Crypto. Crypto Said "13% of GDP, Hold My Stablecoin." 🏔️

The International Monetary Fund is calling on Nepal to formally monitor cryptocurrency activity, even as legal prohibition remains in force, according to the Fund's 2026 Article IV Consultation. The report, released Tuesday, was published as the IMF Executive Board completed the seventh and final review under Nepal's Extended Credit Facility on June 5. "Flows of stablecoins and unbacked crypto assets grew markedly between 2019 and 2024, although adoption remains modest relative to peers, despite legal prohibition on crypto transactions," the IMF wrote, adding that adoption in Nepal "warrants close monitoring."

Nepal banned all crypto transactions in 2021, with the central bank declaring trading, mining, and related activity illegal. Despite the prohibition, crypto inflows were negligible in 2020 before topping $2.6 billion in 2021, briefly exceeding 13% of GDP according to IMF staff calculations. Volumes then fell to roughly 4% of GDP by 2023 before climbing back toward 8% in 2024, with stablecoins making up the larger and growing share of activity. On cross-border flows, the Fund pegged Nepal at around 5% of GDP in early 2025, ahead of Bangladesh and Myanmar but far behind Vietnam at roughly 26%.

The IMF is recommending a regulatory framework aligned with international standards, saying it "would help safeguard financial stability and integrity and consumer protection, while limiting circumvention of capital controls or large-scale deposit outflows." The Fund also pressed Nepal to complete a Financial Action Task Force action plan and exit the watchdog's grey list. Musheer Ahmed, founder and managing director of Finstep Asia, told Decrypt the ban-versus-regulate debate starts with a category error. "The technology is not regulated. The use cases may be regulated," Ahmed said, noting that countries where crypto is banned or heavily restricted are still opening the door to tokenization use cases involving real-world assets and traditional finance. He added that the use cases which persist, such as trading and remittances, are exactly the ones worth regulating: "On the trading front, it does make sense to bring in regulations" for consumer and investor protection, he said, while regulators must balance oversight of cross-border payment rails against longstanding concerns around monetary risks and capital controls.

The IMF has spent years pressing governments to rein in digital assets, most visibly in El Salvador, which scaled back its $BTC experiment in December 2024 to land a $1.4 billion fund facility. The Fund has maintained that government Bitcoin purchases stopped, with a spokesperson previously telling Decrypt that "the total amount of government-owned Bitcoin has not increased and that the increase in the Bitcoin Reserve Fund corresponds to movements across government wallets." El Salvador's President Nayib Bukele has claimed otherwise, asserting that the nation continues to buy one $BTC a day.