Crypto-assets, which include cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and tokenised deposits, have evolved from a niche experiment into a platform for digital transformation. With the market maturing, the underlying technology better understood, and clarity in regulations, they are redesigning the future payment system, moving value as seamlessly as data. Due to its unique characteristics of decentralised infrastructure, borderless transactions, and privacy concerns, conventional regulatory frameworks cannot effectively govern this technology.

Nepal’s approach toward digital assets is restrictive. Digital assets are not permitted in Nepal. This cautious approach by the Nepal Rastra Bank is understandable for a country with capital controls, shallow financial market infrastructure and heavy dependence on remittance inflows.

With Nepal receiving around $10 billion in annual remittances, and an increasing number of Nepalis participating in the global gig economy, the need for a comprehensive digital assets policy has become pressing. If blockchain and the crypto industry can be regulated and managed, it can unlock new economic opportunities critical for a growing economy.

Globally, the suitability of the approach depends upon market maturity, regulatory readiness, consumer awareness, perceived threat to financial stability, potential opportunities and other local nuances. This has resulted in a complex regulatory landscape that ranges from total prohibition to full adoption of crypto-assets. In recent years, several jurisdictions have shifted away from total prohibition to a risk-based regulatory framework.

In Nepal, too, the restrictions have not eliminated interest, merely making it covert. The Central Bank’s ‘Strategic Analysis Report, 2025: Virtual Assets’, acknowledges this dilemma, suggesting that a shift towards a regulated framework may be effective. Nepal can learn from early adopters’ mistakes, avoid legacy pitfalls, and leapfrog to adopt a better policy framework.

The prohibition model, adopted by countries like Nepal, Bangladesh, Algeria and Morocco, treats crypto-assets as a threat to monetary sovereignty and capital controls, leading to near-total restriction. China has taken a clear stance of restricting cryptocurrency while promoting blockchain and deploying Central Bank Digital Currency. Countries like India, Indonesia, Thailand and Vietnam have adopted restrictive regulated models, where crypto-assets are treated as an asset class under strict compliance. This policy is not anti-crypto but includes controls, tax collection and consumer protection.

The US, Canada, Australia and Japan have adopted lighter regulation that is market-driven, while EU countries have advanced crypto ecosystems regulated by the Markets in Crypto-assets (MiCA) framework. The US has recently enacted the GENIUS Act, the CLARITY Act and the Anti-CBDC, promoting digital assets like stablecoins to integrate with the mainstream financial system.

Policy models are evolving concurrently. The UAE and Pakistan have introduced independent digital assets regulators. Bhutan has adopted a dual strategy of controlled adoption, restricting the general public’s access to crypto-assets, while enabling the state to build sovereign crypto infrastructure. Following the GENIUS Act, which has sparked interest in stablecoins, Japan launched its first Yen-pegged stablecoin under the revised Payment Services Act. Both Korea and China are considering allowing Won- and Yuan-based stablecoins. At the extreme of this spectrum are countries like El Salvador and the Central African Republic, where Bitcoin is a legal tender.

Nepal could adopt a progressive, prudential regulation that is not dualistic but risk-based, with appropriate guardrails to ensure financial stability and consumer protection while minimising possible risks. For this, the country would need a national cryptocurrency and digital assets policy, with clearly defined regulatory architecture as a key pillar.

One of the biggest challenges will then be the classification of crypto-assets. If classified as a security, it would fall under the jurisdiction of the Securities Board of Nepal (SEBON). If treated as money or e-money, it would be regulated by NRB. Globally, overlapping mandates have created confusion leading to uncertainty. Instead, Nepal could create a single, specialised regulator to eliminate such ambiguity. NRB’s report identifies this anomaly and has clearly outlined three possible approaches: regulate through existing institutions, create a second-tier structure, or establish a new authority.

The choice of regulatory architecture will depend on the country’s strategic ambition, regulatory maturity, and institutional and human capacity. Beyond the regulatory design, the policy must also address risks, including monetary sovereignty, capital flow and foreign exchange controls, while also complying with global standards such as FATF and anti-money laundering (AML). In addition, the policy framework must also address consumer protection, tax rules, capacity development, and nimbleness to match the fast-evolving technology.

A young, reform-oriented government in Nepal with a strong mandate for digital transformation offers a new opportunity to rethink its stand on emerging technologies, particularly crypto-assets. Amongst its stated objectives, the ruling party has a priority to formulate a national cryptocurrency policy within a year. Now, a debate needs to be started on intelligent regulations. Nepal must avoid both unchecked liberalisation and total restriction.