Self-custodial wallet / non-custodial software in Nepal
Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.
Self-custodial wallet is not permitted in Nepal.
Verdict Details
- Permitted
- no
- Local entity required
- No
- Licensing burden
- None
- Last updated
- 2026-07-13
AML Obligations
- No AML obligations apply because the underlying crypto activity (buying, selling, mining, or facilitating transactions in cryptocurrencies) is illegal under NRB directives and the Foreign Exchange (Regulation) Act, 2019.
- Any entity publishing self-custodial wallet software targeting Nepalese residents would be facilitating prohibited cryptocurrency transactions, exposing it to criminal liability under the Asset (Money) Laundering Prevention Act, 2008.
Key Restrictions
- Cryptocurrencies are not recognized as legal tender in Nepal.
- Engaging in buying, selling, mining, or facilitating transactions in cryptocurrencies is illegal.
- Sending or receiving money from abroad for cryptocurrency transactions is prohibited.
- The NRB has consistently issued warnings (since 2017) and enforcement actions (e.g., January 2022 CIB crackdown) against crypto-related activities.
- Software that enables self-custodial wallet use by Nepalese residents could be deemed facilitation of illegal financial activity.
Key Risks
- Criminal prosecution risk: individuals found engaging in crypto activities may be prosecuted under the Foreign Exchange (Regulation) Act, 2019, with penalties including fines up to 3× the disputed amount, imprisonment up to 3 years, and asset confiscation.
- 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 made arrests and conducted crackdowns (e.g., January 2022), signaling active monitoring.
- No legal framework exists for licensing or compliance — even a non-custodial software publisher cannot lawfully serve Nepalese residents.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
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.
The NRB has consistently issued circulars and public notices warning against the use and trading of cryptocurrencies like Bitcoin since as early as 2017. These notices typically cite the Foreign Exchange (Regulation) Act, 2019 (B.S. 2076) and its subsequent directives as the legal basis for prohibiting foreign exchange transactions (which cryptocurrencies are often categorized as for regulatory purposes) not authorized by the NRB.
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.
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.
The Kathmandu Post (Jan 2022): CIB arrests six people for trading cryptocurrency
Republica (Jan 2022): CIB arrests six people for illegal cryptocurrency transactions
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.
Not permitted — Nepal has a blanket prohibition on cryptocurrency activities; publishing self-custodial wallet software that enables Nepalese residents to hold or transact in crypto would constitute facilitation of illegal financial activity under NRB directives and the Foreign Exchange (Regulation) Act, 2019, carrying criminal penalties.
Questions this verdict aims to answer
- Does software publishing trigger VASP / MSB classification?
- Do AML obligations attach when no custody exists?
- What disclosure or consumer-protection rules apply?