IMF Urges Nepal to Regulate Rising Crypto Flows

The International Monetary Fund said cryptocurrency flows in Nepal expanded sharply between 2019 and 2024 and recommended closer oversight to protect financial stability and prevent illicit finance. The finding appears in the IMF’s 2026 Article IV Consultation, published as the Executive Board completed the seventh and final review under Nepal’s Extended Credit Facility on June 5.

IMF staff calculations show crypto inflows were negligible in 2020, rose to more than $2.6 billion in 2021-briefly above 13% of GDP-fell to about 4% of GDP by 2023 and climbed toward 8% in 2024. Stablecoins accounted for an increasing share of those flows. The Fund estimated crypto-related cross-border activity at roughly 5% of GDP in early 2025, above estimates for Bangladesh and Myanmar and well below Vietnam’s roughly 26%.

The IMF urged Nepali authorities to establish a regulatory framework that aligns with international standards to safeguard financial stability, protect consumers and reduce money‑laundering risks. The report warned that unregulated crypto activity can enable circumvention of capital controls and trigger large-scale deposit outflows. The Fund also urged completion of a Financial Action Task Force action plan to exit the FATF grey list.

Nepal’s central bank banned all crypto transactions in 2021 and declared trading, mining and related activity illegal. The IMF found that adoption continued despite the ban and described the level of use as modest relative to peers but substantial enough to require monitoring.

Musheer Ahmed, founder and managing director of Finstep Asia, argued regulation should target specific uses such as trading and remittances rather than a blanket ban on the technology. He highlighted that trading and cross-border payment uses often persist in markets where crypto is prohibited and that oversight should focus on consumer protection and the payment rails that carry those flows.

The IMF said it will continue engagement with Nepal through post‑financing assessments and annual consultations, and that crypto oversight has been added to its agenda for future discussions. The report lists crypto oversight among financial‑sector priorities as Nepali authorities work to strengthen governance and meet international compliance benchmarks following political unrest and a change in government last year.