IMF urges Nepal to tighten crypto oversight as flows persist

The International Monetary Fund has urged Nepal to strengthen monitoring of crypto activity across its financial system.

Nepal continues to face rising digital asset flows despite a nationwide ban on trading and mining. The IMF linked these movements to stablecoin usage and cross-border transfers across multiple reporting periods.

According to IMF reports, crypto inflows into Nepal increased sharply after the 2021 ban took effect. The report tracked activity between 2019 and 2024 using revised economic estimates and financial surveillance data.

Nepal crypto activity under ban

Nepal imposed a full ban on crypto transactions in 2021 after the central bank classified them as illegal. However, IMF data showed that inflows still increased during the same year under review. The report stated that inflows exceeded 2.6 billion dollars in 2021 according to IMF estimates. 

This figure temporarily crossed 13 percent of Nepal’s GDP based on revised calculations. By 2023, crypto-related activity dropped to around four percent of GDP. However, IMF data showed renewed movement in later reporting periods.

Stablecoins became a larger part of transaction flows during this phase. Users shifted toward cross-border payment channels according to IMF monitored data. Nepal authorities continued enforcement actions against illegal platforms across the country. The central bank maintained that all crypto trading and mining remain prohibited under national law.

IMF concerns over financial stability risks

The IMF stated that Nepal needs stronger oversight of digital asset flows. It said financial stability requires tighter monitoring systems and improved compliance frameworks. The fund highlighted risks linked to cross-border transfers through unregulated channels. It warned that such flows can challenge existing capital control systems.

IMF officials noted that stablecoin activity has expanded faster than unbacked crypto in emerging markets. The IMF report linked this trend to increasing use in payment settlements.

The IMF also said enforcement gaps allow continued use of digital assets despite legal bans. It pointed to ongoing surveillance challenges in developing economies. Authorities in Nepal confirmed continued monitoring of crypto-related transactions. Regulators also coordinated with international bodies on financial compliance measures.

Stablecoin flows and cross-border pressure

The IMF report showed stablecoins gaining stronger traction in Nepal’s crypto activity. These assets became more widely used for cross-border transfers during the review period. Early 2025 estimates placed Nepal’s crypto flows near five percent of GDP. IMF data showed this level remained higher than several regional peers.

The report connected these flows to payment networks outside formal banking systems. It said such activity continued despite restrictions in domestic policy. Nepal’s central bank reiterated that crypto mining and trading remain fully banned. 

Authorities maintained that enforcement operations continue across financial institutions. IMF consultations with Nepal remain ongoing under Article IV review cycles. The fund said crypto oversight continues to form part of its monitoring discussions.