For most people, sending money overseas is as simple as using an app. But in Nepal, doing that with cryptocurrency can land you in jail for three years - even if you didn’t make a profit, didn’t cheat anyone, and didn’t break any other law. The rule is clear: if you send or receive more than 10 million Nepalese Rupees (about $74,000 USD) in cryptocurrency, you face mandatory imprisonment. And it doesn’t matter if you’re sending money to family, buying goods, or just holding Bitcoin. In Nepal, any crypto transaction is illegal. Not risky. Not unregulated. Illegal.
How the Law Works - and Why It’s So Harsh
The ban isn’t new. Nepal Rastra Bank (NRB), the country’s central bank, first warned against cryptocurrency in 2017. But it wasn’t until the Foreign Exchange (Regulation) Act of 1962 was strictly enforced that penalties became criminal. Under Section 12 of that law, anyone involved in a crypto transaction worth 10 million NPR or more gets a minimum of three years in prison. On top of that, the government can seize everything connected to the transaction - your phone, your laptop, your crypto wallet, even your bank accounts. Fines are just as brutal. The law says you can be fined anywhere from the amount you transacted up to three times that amount. So if you sent $50,000 in Bitcoin, you could be fined $150,000 - and still go to jail. And if you can’t pay? That’s four more years in prison, added on top of the original sentence. It gets worse. Nepal doesn’t just use one law to punish crypto users. Police and prosecutors layer charges. You might be charged under the Foreign Exchange Act, the Electronic Transaction Act, the National Penal Code, and the Nepal Rastra Bank Act - all at once. This creates legal chaos. One person might get charged for money laundering. Another for cybercrime. A third for violating banking rules. The same act, different charges, wildly different outcomes.Who’s Really Getting Punished?
You’d think this law targets big-time criminals - drug traffickers, fraudsters, or money launderers. But the data says otherwise. According to case studies from Lawbhandari and the Central Investigation Bureau (CIB), 87% of people arrested for crypto transactions in 2022 were involved in deals under $10,000. That’s far below the 10 million NPR threshold. One man in Kathmandu was jailed for receiving $5,200 from his son working abroad. Another was arrested for sending $8,000 to pay for his sister’s medical treatment in India. Why? Because enforcement is inconsistent, and prosecutors are under pressure to show results. The NRB claims crypto caused $20.8 million in illegal forex outflows in 2021. So they’re cracking down hard - even when the law doesn’t require it. In one 2022 case, police used the Bitcoin price at the time of arrest ($38,500 per BTC) instead of the price when the transaction happened ($41,200). That dropped the total value below the 10 million NPR line - but the court still sentenced the person to three years. The law says “ten million or more.” But in practice, they’re bending it to fit their narrative. And the collateral damage is real. Digital devices are routinely seized during raids. Police use tools like Cellebrite UFED to extract wallet keys from phones and laptops. If you’re caught, you lose your tech, your crypto, and your freedom - even if you’re never convicted. Pretrial detention can last six to 18 months. One man spent 18 months in jail before his case even went to trial. He had $78,000 in Bitcoin. He was charged for a $5,000 transaction.How It Compares to the Rest of the World
Nepal is one of only 12 countries in the world that criminalizes cryptocurrency transactions with jail time. Compare that to India - where crypto is taxed at 30%, but legal. Or China - where trading is banned, but holding Bitcoin won’t get you arrested. Thailand and Singapore have licensed exchanges. Nepal has none. Even Bangladesh, with its own crypto ban, only targets transactions over $46,000 - higher than Nepal’s $74,000 threshold. The NRB says the ban stops capital flight. They claim 5.7% of Nepal’s $2.1 billion in annual remittances - about $119 million - moved through crypto in 2022. That’s money people used to avoid the 1% fee banks charge for international transfers. For many Nepalis, crypto wasn’t speculation. It was survival. A way to send money home faster and cheaper. But instead of fixing the system, Nepal shut it down. And now, the people who need it most - migrant workers, families relying on overseas income, small business owners - are the ones paying the price.
Legal Experts Say It’s Unconstitutional
Lawyers aren’t silent. Dr. Prakash Kafle, a constitutional law professor at Tribhuvan University, calls the three-year sentence “disproportionate.” He compares it to punishing someone for carrying a bag of rice like they’re smuggling heroin. Senior advocate Ramesh Dahal told the Supreme Court in 2022 that Section 12 violates Article 26 of Nepal’s Constitution - which guarantees the right to property and economic freedom. The courts are starting to notice. In 2024, judges began reducing sentences for transactions under the 10 million NPR threshold, citing “proportionality.” One judge dropped a sentence from three years to one year after realizing the transaction was $38,000 - less than half the threshold. But these are exceptions. Most cases still go the old way. The Supreme Court is currently reviewing a constitutional challenge (Writ No. 0804/080). A decision is expected by late 2024. If the court rules the law unconstitutional, it could change everything. But until then, the threat remains.What Happens If You’re Caught?
There’s no gray area. If you’re caught:- Your devices - phone, laptop, external drives - are seized immediately.
- You’re presented to a court within 24 hours.
- You can be held without bail for up to 25 days - or 90 days if police say it’s linked to money laundering.
- Prosecutors have 90 days to file formal charges, but delays are common. Many wait six months or longer.
- Even if your transaction was under the threshold, you’ll still be charged under multiple laws.
- Legal representation is rare. Most defendants don’t have lawyers who understand blockchain or digital forensics.
Is There Any Hope for Change?
The government says no. In January 2024, NRB expanded the ban to include “any technology facilitating crypto transactions.” That means even using a VPN to access a foreign exchange platform could be illegal. NRB Governor Maha Prasad Adhikari said in a February 2024 interview that the three-year penalty will stay “until we establish foolproof monitoring.” But the numbers don’t lie. Chainalysis estimates 210,000 Nepalis used crypto in 2022. That’s 0.8% of the population. And yet, the crackdown has done nothing to stop it. It’s just driven it deeper underground. Some experts think Nepal will eventually follow India’s path - tax crypto, don’t ban it. But NRB shows no sign of changing. Meanwhile, ordinary people keep getting locked up for trying to send money home.What This Means for You
If you’re in Nepal - or have family there - and you use cryptocurrency, even for small transfers, you’re at risk. The law doesn’t care if you’re innocent. It doesn’t care if you’re helping your parents pay rent. It only cares about the number on the screen. If you’re outside Nepal and sending crypto to someone there, you’re not safe either. The recipient can still be arrested. The law doesn’t distinguish between sender and receiver. Both are equally guilty. There’s no workaround. No legal loophole. No safe amount. The only way to avoid this is to avoid crypto entirely - and use official channels, even if they’re slow and expensive. The system isn’t broken. It’s working exactly as designed. But what it’s designed to do - protect the financial system - is failing the people it was meant to help.Is it legal to hold cryptocurrency in Nepal?
No. Holding cryptocurrency is not explicitly banned in writing, but any transaction - buying, selling, sending, receiving, or even storing crypto with intent to trade - is considered illegal under Nepal’s Foreign Exchange Act. Authorities treat possession as evidence of intent to transact, and possession alone has led to arrests and asset seizures.
What happens if I send less than 10 million NPR in crypto?
You can still be arrested. While the law says imprisonment applies only to transactions of 10 million NPR or more, prosecutors frequently charge people under other laws - like the Electronic Transaction Act - even for small amounts. In 2023, 17 people were prosecuted for sending $5,000-$10,000 in Bitcoin. The threshold is ignored in practice.
Can I use crypto to send remittances to Nepal?
No. Sending crypto into Nepal is illegal, regardless of the amount. Recipients face arrest, device seizure, and possible imprisonment. Even if the sender is overseas, the recipient is still legally responsible. Official remittance channels (like Western Union or bank transfers) are the only legal options.
Are there any exceptions for businesses or miners?
No. The ban applies to everyone - individuals, businesses, miners, exchanges, or developers. Nepal Rastra Bank has explicitly prohibited all financial institutions from offering crypto services. No licenses exist. No exceptions are allowed.
What should I do if someone I know is arrested for crypto in Nepal?
Contact a lawyer immediately who specializes in financial crime or digital forensics. Do not try to pay bribes or negotiate with police. Secure legal representation before any formal charges are filed. Document everything - transaction dates, amounts, wallet addresses - and keep records of any communication. Legal outcomes vary widely, and having proper representation is critical.
Elizabeth Melendez
2 11 25 / 10:35 AMOkay but let’s be real - this isn’t about crypto. It’s about control. Nepal’s banking system is a mess. Remittances are the lifeblood of the economy, and banks are charging people insane fees just to send money home. Crypto was the only way millions of workers could bypass that. Now instead of fixing the system, they’re throwing people in jail for trying to survive. I’ve seen stories of moms sending $300 to pay for insulin. Three years in prison for that? That’s not law. That’s cruelty wrapped in bureaucracy.
And the worst part? The police don’t even know how blockchain works. They’re seizing phones, pulling wallet keys with Cellebrite, and then misreporting Bitcoin prices to make the numbers fit. One guy got nailed for $5,000 but they used the price from when he got arrested, not when he sent it. That’s not justice. That’s performance art.
It’s like they’re punishing people for using a better tool. Imagine if the government outlawed PayPal because it bypassed Western Union fees. Would you think that’s fair? Of course not. But here we are, and no one’s talking about the real issue: the lack of affordable, accessible financial infrastructure. Crypto wasn’t the problem. It was the solution.
And now people are scared to even hold it. They’re deleting wallets, selling coins at a loss, and going back to 1% fees and 3-day delays. That’s not progress. That’s regression. And the people who suffer most? The ones who can’t afford to lose time or money. Migrant workers. Single parents. Elderly families waiting for help. This law isn’t protecting Nepal. It’s punishing them.
I’ve talked to Nepali students in the U.S. who are terrified to send crypto to their siblings back home. One girl cried telling me her brother got arrested for receiving $4,200. He spent six months in jail before they dropped the case. His laptop’s still gone. His crypto’s gone. And now he can’t get a loan because he has a “financial crime” record for something that wasn’t even a crime in any other country.
There’s a reason 210,000 Nepalis used crypto last year. Not because they’re gamblers. Because they’re smart. They found a loophole in a broken system. And now the system is trying to crush them for it. The NRB says they’re fighting capital flight - but the money’s still leaving. It’s just going through black markets now, with no transparency, no records, no protection. That’s worse.
Why not tax it? Why not regulate it? India did. Thailand did. Even Bangladesh has a higher threshold. Nepal’s law is a blunt instrument in a world that’s moving toward digital finance. And the cost? Human lives. Families torn apart. Dreams destroyed. This isn’t policy. It’s panic dressed up as law.
Phil Higgins
4 11 25 / 04:54 AMThe fundamental flaw here is the conflation of technology with crime. Cryptocurrency is a protocol, not a moral actor. To criminalize its use without addressing the underlying economic failures - stagnant wages, exploitative remittance fees, lack of banking access - is to mistake the symptom for the disease.
Section 12 of the Foreign Exchange Act is not merely outdated; it’s epistemologically incoherent. It assumes that value can only be transferred through state-sanctioned channels, ignoring that value is a social construct, not a legal decree. The state claims to protect the currency, yet it enforces a law that actively undermines trust in its own financial institutions.
What we’re witnessing is not an enforcement of law, but the performance of sovereignty. The prison sentences serve as spectacle - a warning to the populace that the state retains ultimate control over movement, even digital movement. The fact that 87% of arrests involve transactions under $10,000 confirms this: it’s not about scale. It’s about symbolism.
Compare this to India’s 30% capital gains tax on crypto. There, the state acknowledges the reality of decentralized finance and seeks to extract revenue from it. Nepal chooses to deny it - and in doing so, creates a black market that is far more dangerous, unregulated, and exploitative than any decentralized network could ever be.
The constitutional challenge is the only path forward. Article 26 guarantees economic freedom. To equate holding Bitcoin with smuggling heroin is not just disproportionate - it’s a violation of the principle of legality. The law must be clear, consistent, and proportionate. This law is none of those things.
Until the judiciary intervenes, this isn’t a legal system. It’s a theater of repression.
Ron Cassel
5 11 25 / 19:34 PMTHIS IS WHY THE FEDS ARE WATCHING. Nepal’s crypto ban? It’s a dress rehearsal for what’s coming to the U.S. They’re testing how far they can go before people push back. If they can lock up a guy for sending $5,000 to his sister, what’s stopping them from doing the same here? They’re building the infrastructure right now - asset seizures, digital forensics tools, multi-law stacking. This isn’t about Nepal. It’s about the global war on financial freedom.
And don’t fall for the ‘it’s just for remittances’ lie. Once they control crypto, they control your money. They’ll track every transaction. They’ll freeze your account if you buy too much gas. They’ll flag you if you send crypto to a friend who’s on a protest list. This is step one of the digital authoritarian playbook.
Remember when the government said ‘we’re only going after terrorists’? Then it was ‘drug dealers’. Then it was ‘tax evaders’. Now it’s ‘crypto users’. Next it’ll be ‘people who use VPNs’. And you think you’re safe because you don’t use crypto? You’re next. The system doesn’t care who you are. It only cares that you’re not under its thumb.
They’re already using Cellebrite to extract wallet keys. They’re storing blockchain data in federal databases. This isn’t paranoia. It’s documented. Look at the IRS’s new crypto reporting rules. Look at the FBI’s blockchain unit. Look at the way they’re pressuring exchanges to KYC everyone. Nepal is just the canary in the coal mine.
If you’re reading this and you think ‘it won’t happen here’ - you’re already losing.
Eric Redman
6 11 25 / 07:50 AMSo let me get this straight - you can’t send crypto to your mom in Kathmandu because the government says it’s illegal… but you can fly to Dubai, buy Bitcoin, and bring it back in your carry-on? No one’s stopping you. So why jail people? Because they’re too lazy to police the borders? This law is a joke.
I’ve got a cousin who works in Nepal. He sends money via crypto because the bank takes 10 days and 7% in fees. Now he’s terrified to talk to her on the phone. She could get arrested just for having the wallet open on her phone. That’s not law. That’s psychological warfare.
And the fact that they’re using Bitcoin prices from the day of arrest to inflate the amount? That’s not even law enforcement. That’s creative accounting. If I stole $10,000 and the stock market crashed the next day, would you still fine me $30,000? No. But they do it to crypto users. Why? Because they can.
Also - who the hell is prosecuting these cases? The same guys who couldn’t figure out how to run a decent website for the national ID system? I’m not surprised they’re messing up blockchain forensics.
Someone please tell me why we’re not all screaming about this. This is the future. And it’s already here.
Jason Coe
6 11 25 / 08:00 AMIt’s wild how the same people who scream about financial freedom in the U.S. are completely silent when it happens overseas. We’re all about ‘decentralization’ and ‘permissionless innovation’ until someone gets arrested for sending $8,000 to their sick sister. Then suddenly it’s ‘well, maybe regulation is needed’.
But here’s the truth: crypto didn’t create this problem. The banking system did. Nepal’s remittance infrastructure is ancient. Banks charge 5–7% to send money. It takes 3–5 days. And if you’re poor, you’re stuck with it. Crypto cut that to minutes and 0.5%. That’s not a crime. That’s innovation.
And now they’re punishing the poor for being smart. The NRB claims $119 million left through crypto - but they ignore that $1.2 billion still leaves through traditional channels. So why target crypto? Because it’s visible. Because it’s new. Because they can’t control it.
The real issue? No one in Nepal’s government understands blockchain. They don’t know what a wallet is. They think ‘crypto’ is just money you can’t track. But they’re wrong. Crypto is the most trackable money ever created. Every transaction is public. The real problem is they don’t have the tools to use that transparency - so they just lock people up instead.
Imagine if the U.S. made it illegal to use Venmo because you didn’t pay a fee to PayPal. That’s what this is. And it’s disgusting.
And don’t even get me started on the device seizures. Police take your phone, extract your keys, then sell your crypto? That’s not law enforcement. That’s state-sponsored theft. And no one’s talking about it.
Beth Devine
7 11 25 / 18:35 PMI know a few Nepali families who’ve been affected by this. One woman in California sent $4,000 in ETH to her aging parents in Pokhara. They didn’t even cash it out - they just held it. But police raided their home, seized their laptop, and arrested the father because the wallet was on the desktop. He spent nine months in jail before the charges were dropped. His phone’s still gone. His savings are gone.
They don’t care that he’s a retired teacher. They don’t care that he’s never broken any other law. All they see is a number on a screen and a rule that says ‘three years’.
This isn’t about crime. It’s about fear. Fear of losing control. Fear of being irrelevant. The NRB doesn’t want people to bypass them. So they punish them. Brutally.
And the worst part? Most Nepalis don’t even know their rights. They think if they’re arrested, they’re guilty. They don’t know they can challenge the seizure. They don’t know the threshold is supposed to be 10 million NPR. So they just pay bribes and take the sentence.
We need to raise awareness. We need to support lawyers who take these cases pro bono. We need to pressure the U.S. State Department to speak up. This isn’t just Nepal’s problem. It’s a human rights issue.