Crypto Trading Ban In Nepal Deterring Fraud Victims From Reporting To Authorities, Report Says

Nepalese Financial Intelligence Unit (FIU), in its 2024 Strategic Analysis Report, open The country’s blanket ban on cryptocurrency trading has become a major obstacle for fraud victims seeking to report their cases to the authorities.

A quick overview of the digital assets ecosystem in Nepal

The Financial Intelligence Unit is a branch of Nepal Rastra Bank, the country’s central bank. It monitors and reports suspicious transactions, especially those linked to illicit activities such as money laundering and terrorist financing.

The report highlighted an increase in the number of fraudsters using techniques such as “spoofing”, where large transactions are broken up into smaller amounts to avoid detection. In addition, these scammers convert illicit funds into digital currencies, making it difficult for authorities to trace or freeze assets.

The FIU also stressed that many individuals are being tricked into investing in digital assets with promises of extraordinary returns. The report noted:

The ads direct the potential prey to deposit an amount into certain bank accounts or wallet accounts. The amount thus deposited is not returned later as promised. In countries like Nepal, where investing in virtual assets like cryptocurrencies is illegal, victims rarely file complaints against these scams due to potential repercussions.

Nepal Forbidden Trading and mining digital assets in September 2021. Then, in January 2023, Nepal Telecommunications Authority commander Internet Service Providers (ISPs) to block access to all cryptocurrency-related websites, including trading platforms.

Social media and online advertising are major channels through which scammers lure unsuspecting victims into fake digital asset investment schemes. However, the illegal status of digital asset trading in Nepal has discouraged victims from reporting these incidents to law enforcement, further empowering scammers.

The Financial Intelligence Unit has called for stricter oversight of cryptocurrency transactions in the country to curb such fraudulent activities. The report also stressed the importance of increasing public awareness, enhancing cross-departmental cooperation, and establishing a balanced regulatory framework to more effectively address cryptocurrency-related fraud.

Cryptocurrency regulations in South Asia

Nepal is one of the few countries, along with China, Russia, Iran, Bangladesh and others, that have banned all digital asset trading activities. However, other South Asian countries have adopted different approaches towards digital assets.

For example, digital asset trading is not completely banned in India. However, the country has imposed High tax on profits generated from cryptocurrency trades, without the option of using losses to reduce potential tax liabilities.

On the other hand, Pakistan recently take A major regulatory shift by legalizing virtual assets, a radical departure from its previous anti-crypto stance. However, analysts believe that this policy shift is primarily aimed at introducing a central bank digital currency (CBDC) rather than fully embracing decentralized cryptocurrencies.

Bhutan is probably the most pro-crypto country in the region. Total BTC stock in the country recently crossed Billion dollars, supported by rising cryptocurrency prices. BTC is trading at $89,856 at press time, down 0.9% over the past 24 hours.

Featured image from Unsplash.com, chart from TradingView.com