Why Don’t Developing Nations Like Nepal Legalize Cryptocurrency

Cryptocurrency is one of the hottest topics in today’s digital world — a revolutionary way to handle transactions. Although it is still in its early stages, it has already made a significant global impact. Unlike traditional banking, cryptocurrency operates on a peer-to-peer (P2P) model, meaning transactions can happen directly between individuals, regardless of their location or nationality, without intermediaries like banks.

However, many developing nations have banned the buying, selling, and trading of cryptocurrency. The reasons for this are complex, but the most critical ones include:

• Heavy dependence on remittance as a key part of the national economy.
• Lack of infrastructure and resources to regulate crypto transactions.
• Limited expertise in blockchain technology and financial security.
• Risk of devaluing national currency in the international market.
• High chances of fraud and scams, especially in countries where financial literacy is low.
• Tax evasion risks, as crypto transactions are harder to monitor.

All these factors contribute to why countries like Nepal hesitate to embrace cryptocurrency. Below, we dive deeper into the main reasons why Nepal has not legalized crypto yet.

1. High Dependency on Remittance

Nepal’s economy heavily relies on remittance, with a significant portion of GDP coming from money sent by workers abroad. If cryptocurrency were legalized, people could use digital currencies to send money without relying on banks or government-monitored channels.

This would directly impact Nepal’s economy in two major ways:

1. Loss of government control over money flow — The central bank regulates inflation, liquidity, and monetary policies, but crypto operates outside this system.
2. Tax revenue loss — If people start sending and receiving money via crypto, it becomes difficult for the government to track earnings and impose taxes, leading to a loss in public funding.

Thus, Nepal sees crypto as a threat to its financial stability rather than an opportunity.

2. Lack of Resources and Infrastructure ⚙

Nepal lacks the necessary financial and technical infrastructure to support a regulated crypto market. Some of the biggest challenges include:

• No legal framework for cryptocurrency transactions, taxation, and fraud prevention.
• Weak financial systems that are not yet integrated with blockchain technology.
• Limited cybersecurity measures, making crypto transactions vulnerable to hacking and illicit activities.
• Low public awareness — Many people in Nepal are unfamiliar with how cryptocurrencies work, increasing the chances of scams.

Without these foundational elements, legalizing crypto could do more harm than good in the current scenario.

3. Risk of National Currency Devaluation

If crypto adoption rises without proper regulations, it can lead to a decline in the demand for the national currency. This happens because:

• People start using digital currencies instead of NPR (Nepalese Rupees).
• International transactions bypass traditional banking, reducing foreign currency reserves.
• Crypto market instability can introduce economic uncertainty, making Nepalese financial institutions more vulnerable.

These risks make the Nepal Rastra Bank (NRB) hesitant to legalize cryptocurrencies.

Can Nepal Legalize Crypto in the Future?

It’s not impossible for Nepal to eventually legalize cryptocurrency. However, it requires major reforms in financial, legal, and technological sectors. Here’s what Nepal would need to do:

• Develop a strong legal framework to monitor and control crypto transactions.
• Improve financial infrastructure to integrate digital assets into the economy.
• Increase public awareness through education and financial literacy programs.
• Strengthen cybersecurity to prevent fraud, hacks, and illicit activities.
• Implement crypto taxation laws to ensure government revenue is not lost.
• Reduce reliance on remittance by building a self-sustaining economy.

Final Thoughts

Legalizing cryptocurrency in developing nations like Nepal comes with significant challenges — but it’s not impossible. The lack of regulatory frameworks, financial infrastructure, and cybersecurity makes it risky for Nepal to embrace crypto at this stage. However, if Nepal works towards modernization, financial security, and public awareness, the country could create a well-regulated crypto industry in the future.

For now, the risks outweigh the benefits, and that’s why Nepal continues to ban cryptocurrency trading.