On-shore VASP in Nepal

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.

Nepal Rastra Bank (NRB) Notices/Circulars:

Key points from NRB notices often include:

Foreign Exchange (Regulation) Act, 2019 (B.S. 2076):

Regulatory Approach: Ban/Prohibition.

Not Adopted. The concept of the FATF Travel Rule, which requires VASPs to share originator and beneficiary information for virtual asset transactions, is not applicable in Nepal because the underlying virtual asset activities and the existence of regulated VASPs are prohibited.

None. There are no legally recognized or regulated Virtual Asset Service Providers (VASPs) in Nepal.

Penalties are NOT for non-compliance with the Travel Rule, but for engaging in prohibited virtual asset activities themselves.

Evidence fact np.travel-rule.penalties-can-include not found (may have been renamed).

Legal Status: Cryptocurrency is illegal in Nepal.

Basis of Prohibition: The Nepal Rastra Bank (NRB) has issued multiple directives and circulars prohibiting all activities related to virtual currencies and digital assets. This is primarily driven by concerns related to foreign exchange control violations, money laundering, financial stability risks, and investor protection.

Capital Gains Tax (CGT) Rates:

Regulator Name: Nepal Rastra Bank (NRB)

Entity Targeted: General Public, financial institutions, and any individuals or groups involved in cryptocurrency-related activities. Violation Type: Engaging in, facilitating, or promoting illegal cryptocurrency activities (trading, mining, holding, investment), which are considered violations of foreign exchange regulations and potentially money laundering laws. Penalty Amount: The NRB itself doesn't issue direct "penalties" in these warnings, but the legal framework invoked carries significant penalties. Under the Foreign Exchange (Regulation) Act, 2019 (2076 BS), violations can lead to:.

Confiscation of the disputed amount.

A fine of up to three times the disputed amount.

Imprisonment for up to three years.

Additionally, money laundering charges under the Asset (Money) Laundering Prevention Act, 2008 (2064 BS) can lead to heavier fines and longer prison sentences.

Date: Ongoing, with significant public warnings reiterated in October 2021, January 2022, and subsequent informal statements by officials.

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.

Regulator Name: Nepal Police (specifically, the Central Investigation Bureau - CIB)

Entity Targeted: Multiple individuals involved in the illegal trading and mining of cryptocurrencies. Violation Type: Illegal foreign exchange transactions, operating prohibited financial activities, potential money laundering. These charges are brought under the Foreign Exchange (Regulation) Act, 2019 (2076 BS), and potentially the Asset (Money) Laundering Prevention Act, 2008 (2064 BS) and Cyber Crime Act, 2063 BS. Penalty Amount: Varies by case, but as per the invoked laws, can include:.

Date: A major crackdown occurred in January 2022, leading to multiple arrests. Sporadic arrests and investigations have continued since.

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.