Today we have come up with the very interesting and hot topic i.e. Cryptocurrency
What is Cryptocurrency?
Why it is banned in Nepal?
And is it only banned in Nepal?
Table of Contents
What is Cryptocurrency?
The digital version of money called cryptocurrency, which takes the form of virtual tokens and coins. Since it is virtual money you can use it to buy or sell items from people or companies that accept such payments.
Bitcoin, Ethereum, Litecoin, and Cardano are some ranges of cryptocurrency available. Among them bitcoin is most widely used.
To make bitcoin payment, Bitcoins are transferred form of digital wallet, which are obtained when you buy the currency from crypto exchange, to someone else’s using app or websites.
Why did Nepal banned cryptocurrency?
Nepal is not yet ready to regulate cryptocurrencies. Here listed below are some reason why Nepal had to ban virtual currency.
1. No Revenue to government:
Nepal generate revenue from banking transactions but as bitcoin is independent, there will be no money for the government and bank , it may cause damage to the economy. Source and uses of such currency can not be monitored by Nepalese government . There should be separate institution in Nepal in order to monitor digital currency.
2. Cyber crime
Cryptocurrency exchanges are vulnerable to cyber attacks, which may lead to an irreparable loss of your system. Such currency can be used in various illegal activities like money laundering, convert corrupt money into bitcoin and storing them and sending abroad (NRB claims such activities), fraud and various other things.
3. Cyber scams
Cryptocurrency can be vulnerable to scams. Scammer often use platforms like Facebook, Instagram and Twitter to trick people into these investments.
4. Effects on financial system
Central bank controls the monetary and foreign exchange policy required for sustainable price and balance of payments stability for the sustainable development of the economy. It issues the notes in the country. They also print the currency, in a adequate amount to check inflation.
Bitcoin is basically made digitally, with miners, there is no involvement and no regulation of central bank. So if Nepalese use bitcoin, and some problems arise the NRB can not control it, in fact its impossible to solve it either which may damage our country’s economy.
The value of bitcoin is increasing day by day, there are experts who say, this is unsustainable and basically a bubble that one day may burst and bitcoin’s value will collapse. If a lot of Nepalese converts their ordinary money into bitcoin and the value collapsed, we may see serious situation.
Another problem is converting bitcoin into ordinary currency but what will be the exchange rate, it is uncertain and unpredictable.
5. No regulation
In my personal opinion, this is a main reason for NRB to ban crypto currencies in Nepal. Bitcoin and others digital money can’t be regulated adequately like other ordinary currencies by NRB. It can have several unforeseen consequences and uncertainty. It is not controlled by country’s administrative but by certain organization and individual.
This might be another reason why Nepal Government hasn’t designated bitcoin as a currency. Also, the separate institution should be designed to monitor it.
Future of cryptocurrency in Nepal
Our neighboring country India has already announced the introduction of digital currency, which has made people curious regarding its effect on Nepal. According to the former Executive Director of Nepal Rastra Bank (NRB), Nar Bahadur Thapa, the decisions of the Indian Government will play a huge role in Nepal. “Due to the open border with India , we have no problem exchanging currency. Unless Nepal reforms its existing policies, its national treasury will become empty soon”, he said.
Soon in future different level of institutions like cyber bureau will be established in order to monitor such digital currency transactions. if such institution are established then new law will be reformed by which country and citizen will be benefited.
Nepal is just 1 step behind legalizing the crypto currency.
Is Cryptocurrency only Banned in Nepal?
Besides, Nepal these are the some countries which have banned Cryptocurrency: