A police team deployed from the Central Investigation Bureau (CIB) of Nepal Police for the first time arrested seven persons for running bitcoin exchange business from Kathmandu and Chitwan stating bitcoin banned in Nepal including all cryptocurrencies.
DSP Jeevan Kumar Shrestha of the CIB said
“This is the first incident that the bitcoin operators have been arrested from the country. If found guilty the suspects will be punished under the prevalent laws of Rastra Bank. If convicted, the accused can face fine three times the amount in question and jail term up to three years”
Why is Bitcoin Banned in Nepal?
Earlier, In an event organized by Thames International College ‘Nepal Business Gabfest 2017’, Deputy Director of Nepal Rastra Bank Kedar Prasad Acharya said “Bitcoin is illegal in Nepal.” in response, to question raised regarding bitcoin legalities and regulation in Nepal.
Nepal Rastra Bank published a notice on 13th Aug 2017, stating Bitcoin is not officially currency in Nepal.
As Bitcoin isn’t attached to a state or government and doesn’t have a central issuing authority or regulatory body, it is Untraceable. No way NRB could trust this untraceable currency working outside the law.
Money Laundering laws in Nepal
Except the notice, there is no any laws and Act formulated regarding Bitcoin and Cryptocurrency in Nepal. However, Bitcoin transaction is considered as a method of Money laundering and CIB is investigating in this matter.
Here is a list of all money laundering laws in Nepal:
- Asset (Money) Laundering Prevention Act, 2008
- Asset (Money) Laundering Prevention Rule, 2016
- सम्पती सुद्दिकरण निवारण एेन २०६४ (दोस्रो संशोधन २०७०)
- सम्पत्ति शुद्धिकरण (मनी लाउण्डरिङ्ग) निवारण (पहिलो संशोधन) ऐन, २०६८
- सम्पत्ति शुद्धिकरण (मनी लाउन्डरिङ्ग) निवारण ऐन, २०६४
Effects on Nepalese users
Presently, the country does have a Nepalese Localbitcoins mirror site but has only two buyers and no individuals selling. All cryptocurrency exchange of Nepal has been shut down including Bitsewa. However, All wallets including coinbase and blockchain.info are still working in Nepal.
All wallets site, Mining sites, ICO, HYIP, faucets all sort of bitcoin-related websites are still working in Nepal. So it’s not totally banned but illegal to buy bitcoin.
Legality of bitcoin in Other Countries
Bitcoin is officially legalised by EU, G7 (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) countries, and other 61 countries.
And is illegal in only 4 countries: Bolivia, Kyrgyzstan, Bangladesh in 2014 and Ecuador in 2015. Rest of other countries do not make the usage of bitcoin itself illegal/legal.
On 28 December 2013, the Deputy Governor of the Reserve Bank of India, K. C. Chakrabarty, made a statement that the Reserve Bank of India had no plans to regulate bitcoin.
In China, Bitcoin is illegal for commercial use but legal for private individuals to hold, trade, mine, buy and sell.
The U.S. Treasury classified bitcoin as a convertible decentralized virtual currency in 2013.The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. Per IRS, bitcoin is taxed as a property. In September 2016, a federal judge ruled that “Bitcoins are funds within the plain meaning of that term”
Banning of cryptocurrency in Nepal is the huge backward step for Nepal. Cryptography and cryptocurrency have great potential and have set a solid foothold in the world economy.
Hope that the government will soon realize its endless possibilities and formulate regulations that support the crypto transaction.