Custodial wallet / SaaS in Nepal
Hosted wallet provider that holds keys on behalf of end users, often white-labeled to businesses (custody as a service).
Custodial SaaS is not permitted in Nepal.
Verdict Details
- Permitted
- no
- Local entity required
- No
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- Not applicable — all cryptocurrency activities (including custodial wallet services) are illegal under the Foreign Exchange (Regulation) Act, 2019 (B.S. 2076) and NRB circulars. No lawful AML/KYC regime exists for crypto custodians.
- However, individuals operating outside the law additionally risk prosecution under the Asset (Money) Laundering Prevention Act, 2008 (2064 BS) for money laundering, which carries heavier fines and longer prison sentences.
Key Restrictions
- Cryptocurrencies are not recognized as legal tender in Nepal.
- Engaging in buying, selling, mining, or facilitating transactions in cryptocurrencies is illegal.
- Sending money abroad or receiving money from abroad for cryptocurrency transactions is prohibited.
- There is no legal framework or licensing pathway for custodial wallet services — no definition of a 'qualified custodian', no segregation rules, no cold-storage mandates, no insurance requirements.
- Any entity attempting to provide custodial wallet services is operating outside the law and subject to criminal prosecution.
Key Risks
- Criminal prosecution: Individuals found engaging in crypto activities may be prosecuted under the Foreign Exchange (Regulation) Act, 2019, with penalties including fines of up to 3× the disputed amount, imprisonment of up to 3 years, and confiscation of assets.
- Money-laundering charges under the Asset (Money) Laundering Prevention Act, 2008 can lead to heavier fines and longer prison sentences.
- Active enforcement: Nepal Police (CIB) has conducted major crackdowns (e.g. January 2022 arrests) and actively monitors crypto activities.
- No pending legislation or regulatory path to legitimize custodial wallet services — no known custody legislation is being developed.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Cryptocurrencies are not recognized as legal tender in Nepal.
Engaging in buying, selling, mining, or facilitating transactions in cryptocurrencies is illegal.
Sending money abroad or receiving money from abroad for cryptocurrency transactions is prohibited.
Individuals found engaging in these activities may be prosecuted under existing laws, including the Foreign Exchange (Regulation) Act, 2019, or other relevant statutes, which can carry penalties such as fines, imprisonment, and confiscation of assets.
Foreign Exchange (Regulation) Act, 2019 (B.S. 2076):
Regulatory Approach: Ban/Prohibition.
Non-existent. Since cryptocurrencies are prohibited, there is no legal basis or framework for issuing licenses to operate as a crypto custodian. Any entity attempting to provide such services would be operating outside the law.
Not applicable. As no legal custody services are permitted, there are no rules requiring segregation of client assets.
Not applicable. With no regulated custodians, there are no requirements for insurance or bonding.
Not applicable. There are no mandates for cold storage or any other form of storage for digital assets, as their possession and transaction are prohibited.
Non-existent. There is no definition for a "qualified custodian" within Nepal's legal framework for digital assets because the concept of legal digital asset custody does not exist.
No specific pending custody legislation. While there might be ongoing discussions within government circles regarding financial technology and digital transformation, there is currently no public information or official announcements indicating any specific pending legislation aimed at regulating cryptocurrency custody. Any future legislation would first need to address the overarching prohibition of cryptocurrencies themselves.
Confiscation of the disputed amount.
A fine of up to three times the disputed amount.
Imprisonment for up to three years.
Confiscation of assets used in the illegal activity.
Additionally, money laundering charges under the Asset (Money) Laundering Prevention Act, 2008 (2064 BS) can lead to heavier fines and longer prison sentences.
Outcome: Crypto activities remain illegal in Nepal. These warnings serve as a deterrent and provide the legal grounds for law enforcement agencies (like Nepal Police) to initiate criminal investigations and arrests.
Outcome: Several individuals were arrested, investigated, and faced legal proceedings. These actions send a strong message that authorities are actively monitoring and prosecuting those involved in crypto activities. The outcome for individual cases can include pre-trial detention, asset seizure, and eventual conviction with fines and imprisonment.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
No — custodial wallet / SaaS operation is not permitted in Nepal. Cryptocurrency activities are banned outright under the Foreign Exchange (Regulation) Act, 2019, with no licensing framework, no qualified-custodian regime, and active criminal enforcement (fines up to 3× the amount, up to 3 years imprisonment, asset confiscation, and potential money-laundering charges).
Questions this verdict aims to answer
- What custody license / qualified-custodian status applies?
- What segregation, insurance, and proof-of-reserves rules apply?
- What AML obligations attach to the SaaS vs the white-label client?