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Why Did Nepal Ban Cryptocurrency?

With the world moving with crypto, why did Nepal ban cryptocurrency? Will it really try to slow progress in the technological world?

With the world run by digital cash cryptocurrency, why did Nepal ban cryptocurrency? Does it really impose greater threat to the country’s economy?

On April 4, 2023, Nepal Rastra Bank issued an in-depth paper digging into risks concerning cryptocurrencies in the country. This thorough study carefully lists 13 major dangers of bitcoin trading in Nepal. According to the research, Bitcoin has the potential to endanger the country’s foreign currency reserves.

Cryptocurrency is a digital or virtual currency that operates as a medium of exchange. Still, it lacks physical representation like traditional coins or banknotes. Instead, it relies on cryptographic techniques for security and the validation of transactions. This digital currency is popular as an innovative and decentralised alternative to conventional forms of money.

Let’s look at the reasons why did Nepal ban cryptocurrency.

1 Financial Scams

financial scams

Regarding financial scams, cryptocurrencies can be a significant concern in Nepal due to the lack of clear regulations and limited awareness about this technology. The lack of proper rules and oversight can create an environment where scammers can efficiently operate, deceiving individuals and investors. These scams can take various forms, including fake initial coin offerings (ICOs), phishing schemes, and fake exchanges and wallets. 

2 Nepal’s Financial System

Nepal Rastra bank

Central banks, like Nepal’s NRB, are significant in managing a country’s money and ensuring economic stability. They print and control the regular currency, and they do this to prevent things like too much inflation, which is when prices rise too quickly. Bitcoin, one of the cryptocurrencies, It’s not like money that can be touched. It exists only on the internet. Any central bank, including NRB does not control Bitcoin. A network of miners maintains it, and a central bank sets no rules or regulations.

If people in Nepal start using Bitcoin and run into problems with it, the NRB can only do something to help. They can’t control or fix issues with it because it’s a global digital currency with no central authority. This could harm our country’s economy if something goes wrong with Bitcoin, and we can’t do anything about it. 

3 No Revenue To Government

Bitcoin

In Nepal, the government earns money from banking transactions because they can track them and apply taxes. However, Bitcoin, a digital currency, operates independently and isn’t controlled by the government or banks. The government may miss out on potential revenue, harming the economy. Additionally, it’s difficult for the government to monitor where Bitcoins come from and how they’re being used. To address this, some believe that Nepal should create a special institution to oversee digital currency transactions. This institution could help regulate and keep track of digital currencies, ensuring that they don’t harm the economy or go untaxed.

4 Trading Issue

markert graph

Cryptocurrency exchanges are the go-to places for people to buy, sell, and trade cryptocurrencies. Yet, these exchanges are not invincible and can run into operational problems. This can include technical interruptions affecting the website’s functionality.

Downtime when the exchange is temporarily unavailable, and even security breaches where hackers can gain unauthorised access. During these disruptions, users might struggle to log into their accounts or carry out their planned cryptocurrency transactions. Such exchange failures can be frustrating and financially damaging for those using these platforms.

5 Cybersecurity Risks and Potential Illegal Activities

hackers

Cryptocurrency exchanges can be vulnerable to cyberattacks. Since these digital assets are stored electronically, there’s a risk of losing them if the exchange’s security is compromised. Cryptocurrencies have been associated with certain illegal activities due to their relatively anonymous nature. Money laundering, fraud, and other illegal transactions have been reported. However, it’s important to note that not all cryptocurrency users engage in such activities.

Conclusion

So now you know why did Nepal ban cryptocurrency. To people who were looking foward for the technolocigal advancment and eradicating currency monopoly. What do you still think after all these reason to back up?

While the ban aims to protect people from potential risks. It’s also important for the government to consider regulating and supervising cryptocurrencies. This will help the government to harness their potential benefits while justifying the associated challenges. The cryptocurrency ban makes it essential for people in Nepal to avoid all cryptocurrency-related activities to stay within the bounds of the law

Luzon Technologies

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