Cryptocurrency (in Nepal): Top Secrets About Cryptocurrency That Will Blow Your Mind

Table of Contents

Overview
The Nepalese central bank is also planning the launch of a digital currency
Nepal’s Ban on Crypto
Nepal’s Journey on Digital Currency to Kick Start
NRB Act Amendment
World’s Current Scenario
Digitization in Nepal
Some Legal Actions

 

Overview

In recent years, there has been a lot of talk about cryptocurrencies, digital currencies, and digital asset management, and Nepal is no exception. Nonetheless, most countries are still in the early phases of building centralized digital currencies, which is understandable. Nepal's central bank is also planning to launch a digital currency, which might boost the country's competitiveness in the present global market. The bank anticipates that this new currency will aid in the reduction of inflation and the acceleration of economic growth.

The Nepalese central bank is also planning the launch of a digital currency

We must have heard that the Nepalese government declared cryptocurrencies illegal. There have been some recent reports of illicit virtual currency transactions. In the midst of all of this, there has been some fantastic news for technology fans. The government of Nepal intends to launch a digital currency through the Nepal Rastra Bank.

The Nepal Rastra Bank has begun preliminary research to kick-start the transition to digital currency. Nepal is obligated to prepare for such a currency because its neighbors, India and China, have greatly outpaced Nepal in terms of implementing digital currencies in their own countries.

Nepal’s Ban on Crypto

Some time ago, the Nepal Rastra Bank (NRB) adopted a regulation forbidding all Nepali nationals from purchasing or investing in cryptocurrencies. This comes as no surprise in Nepal, where the NRB has previously expressed concerns about the use of cryptocurrencies in terms of security and fraud.

The guideline, on the other hand, was to take one step forward. It also made it difficult for foreigners living in Nepal to transact in cryptocurrency. Following that, there was a flurry of news highlighting how innocent people looking to work abroad would be misled and defrauded by the use of cryptocurrencies. The media also focused on how the use of cryptocurrency would result in capital flight. Authorities used the media to spread this type of information to prevent people from using cryptocurrencies.

Regardless of what is stated in the circular, I believe we should concentrate on how new technologies will impact our way of life and how we may believe that digital transformation would benefit society.

Nepal’s Journey on Digital Currency to Kick Start

Nepal began its digital currency journey in response to India's digital transformation, with digital money set to be launched this year. The Indian government announced plans to deploy a digital form of its currency in the fiscal year 2022-23, which begins on April 1.

One of the world's major economies, and our nearest neighbor, has just begun, while our other neighbor, China, is a few steps ahead. China has already begun testing digital money as a pilot project in various cities.

For Nepal launching a digital currency is a long way to go yet the recent intentions of NRB could be seen as positive steps ahead toward the introduction of digital currencies.

The NRB is now conducting a feasibility assessment for the digital currency. The study's foundation is based on how the use and viability of digital currencies affect people all around the world. The Monetary Policy for Fiscal Year 2021-22 reflects the same issue.

The NRB intends to wait for the reactions of our neighboring countries and the rest of the world before making a final decision on digital money. Our wait will be over in the next 2-3 years when we see the final edition of the currency.

NRB Act Amendment

The current version of the Nepal Rastra Bank Act makes no mention of digital currency. If the NRB remains dedicated to introducing digital money, the current Nepal Rastra Bank Act will also need to be amended. The Act shall empower the NRB to create and manage digital currency.

A central bank is a financial entity responsible for regulating the economy. A central bank's digital currency is a legal tender issued in digital form. It will be exchangeable for fiat money and will have the same value. The only thing that will be different is the format.

World’s Current Scenario

For a few years, we've been hearing a lot about cryptocurrencies like Bitcoin, Ethereum, and so on. Most governments are still in the early stages of developing centralized digital currencies, which is unsurprising.

According to a Bank for International Settlements survey of central banks conducted in 2021, 86 percent were in the research phase, 60 percent were experimenting with technology, and 14 percent were launching trial projects.

China has been testing the digital yuan in Chinese towns for the last two years as it prepares for a countrywide rollout that might put China ahead of Europe and the US.

Digitization in Nepal

The value of the digital currency is becoming more generally understood as the world progresses toward the digitization of everything. Nepal has seen a substantial surge in the use of digital payment systems in recent years.

According to central bank data, Nepalese made banking transactions of Rs88.53 billion in the current fiscal year 2021-22, up from Rs30.28 billion in the previous fiscal year.

Similarly, digital wallet providers processed Rs15.52 billion in transactions by mid-December 2021, up from Rs8.98 billion in mid-December 2020. According to central bank statistics, there has been a significant increase in financial transactions via other digital means as well.

As individuals increasingly prefer digital banking transactions, there is a possibility that they will purchase virtual currencies established by the private sector, the function of which could be disruptive. As a result, Nepal should think about introducing a central bank digital currency.

Some Legal Actions

The use of virtual currency or cryptocurrency is not authorized in Nepal. The central bank stated in a notification that it has been informed that consumers have been duped into investing in virtual currency-related super funds and participating in network marketing for virtual currencies such as Jocial, Crowd 1, and Solemax Global.

The central bank has the power to initiate legal action against people who take part in such conduct.

The Department of Revenue Investigation filed a complaint at Kathmandu District Court against four people on the charge of illegally investing in virtual currencies, amounting to Rs376.41 million in foreign exchange misappropriation.

Conclusion

The terms cryptocurrencies and digital currencies are used interchangeably in this article. However, there are critical differences between them. Digital currencies are just e-cash that does not require any specific indigenous encryption technologies. Cryptocurrencies, on the other hand, are stored on a blockchain, and the coins themselves are kept in 'wallets,' which provide a considerably better level of cyber security. 

The digital money issued by the NRB may not be based on decentralized blockchain technology. Because the government (NRB) will lose autonomy as a result of blockchain technology, something no government would like. 

However, a new step toward digital transformation would be a significant accomplishment for Nepal. I'm anxiously awaiting the latest updates.