IMF Urges Nepal to Monitor Growing Crypto Usage Despite Ban

On June 5, 2026, the International Monetary Fund (IMF) released its 2026 Article IV Consultation, revealing a notable increase in cryptocurrency usage in Nepal despite an existing legal ban. The report indicates that crypto inflows in the country soared above 13% of GDP in 2021, driven mainly by the use of stablecoins and unbacked crypto assets. Despite an initial downturn, these flows rebounded to about 8% of GDP by 2024.

The IMF has called on Nepal to adopt regulatory measures aligned with international standards. Such oversight aims to protect financial stability and prevent capital flight, warning that without proper regulation, there is potential for circumvention of capital controls and significant deposit outflows. According to the IMF, "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."

Notably, the adoption of cryptocurrencies in Nepal contradicts the central bank’s stance, which declared all crypto-related activities illegal in 2021. As reported, crypto inflows were nonexistent in 2020, but they surged to over $2.6 billion in 2021, before tapering off to about 4% of GDP by 2023. Cross-border crypto activity in Nepal has been estimated at around 5% of GDP as of early 2025, placing it ahead of Bangladesh and Myanmar, but significantly trailing Vietnam's 26%.

The IMF emphasizes that establishing a regulatory framework could enhance financial integrity and consumer protection. Musheer Ahmed, founder and managing director of Finstep Asia, commented on the situation, stating that the ban versus regulate discourse is flawed. "The technology is not regulated. The use cases may be regulated," he noted, indicating a need for differentiated regulatory approaches for crypto applications as opposed to a flat prohibition.

This development in Nepal mirrors similar global tensions seen with other jurisdictions, such as the IMF's past conflicts with El Salvador regarding Bitcoin. It poses broader questions regarding how countries manage the rising tide of crypto adoption, especially in regions where traditional regulatory structures lag behind technological advancements.

As Nepal navigates these insights from the IMF, observers will be keen to monitor how the government responds to the ongoing growth of crypto activity and whether it opts for a regulatory solution rather than maintaining the outright ban.