Nepal cracks down on illegal Crypto apps, websites; Issues warning

Saif Naqvi
Source: Pixabay

The Nepal Telecommunications Authority has begun a crackdown on several websites focusing on illegal economic activities, specifically related to crypto, online gambling, and hyper networking.

In a notice issued earlier this week, the Nepal Telecommunications Authority (NTA) cautioned against engaging in cryptocurrencies. The notice warned the public about engaging in ‘illegal activities’, singling out cryptocurrency, bitcoin, and online gambling. NTA also said that websites, apps, and online networks related to crypto activities are prohibited to be used, operated, or managed within the country.

“If anyone is found to be doing or have done such activities, action will be taken according to the prevailing law“.

Earlier in March, NTA directed local internet service providers to shut down all crypto trading websites and apps at the behest of the country’s Ministry of Communications and Information Technology.

NTA’s direction comes on the back of a circular issued by the state-owned Nepal Rastra Bank Bitcoin (RSB) banning all cryptocurrency transactions as ‘illegal’. The circular also forebodes non-nationals living in Nepal from transacting in cryptocurrencies. The bank had cited fraud risk and illegal outflow of domestic capital as the main reasons for its direction.

Noting that a few crypto businesses still operated in the country despite the warning, The Central Investigation Bureau of Nepal Police had begun making a few arrests.

Will Nepal take cues from India’s stance?

Nepal’s staunch view on crypto may be extreme, but a local financial expert has claimed that the country is learning from its neighbor India’s integration of digital assets. Speaking to a local news agency, the former Executive Director of NRB, Nar Bahadur Thapa, said that the decisions of the Indian government will play a huge role in Nepal.

“If Nepal is to accept the digital currency as India did, it will help in controlling instability and help to provide cheap loans as well…With the new policy introduced in India, the government of Nepal needs to do three things. First, a thorough study needs to be done. Based on the same study, Nepal should also recognize the cryptocurrency and assimilate the digital currency by levying a profit tax.”

Although the regulatory landscape in India was unclear up until a few months ago, Indian Finance Minister Nirmala Sitharaman announced a 30% tax on crypto transactions in February, essentially giving the green light to trade digital assets.