Bitcoin is a decentralized cryptocurrency which works on a peer-to-peer payment system. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Then it was adopted by a small clutch of enthusiasts. Then Nakamoto disappeared when bitcoin began to attract attention. Bitcoin is a kind of computer program which is developed by private programmers. The transactions in Bitcoin happen directly peer-to-peer without any intermediary.
Primarily Bitcoin among all the cryptocurrencies was introduced as a solution against the current problems the stable economy faces, such as inflation, scalability, income gap. So to think in a way, it’s a currency of anti-establishment and in a sense, challenges the government-backed coins. And if we believe in these lines, it’s not a surprise that governments around the world, including Nepal, are answering the rise of cryptocurrency by imposing bans.
The main arguments in doing so they put –
- Cryptocurrencies are complicated to control legally
- People might store it as unaccounted assets
For some reason, bitcoin and all other cryptocurrencies are banned in Nepal. This is not surprising for a country that forbids its citizens to invest in other countries. Here are some reasons for Nepal Government banning Bitcoin and other Crypto Currencies in Nepal :
- Laws of Nepal: Nepal Rastra Bank, the Central Bank of Nepal in its statement banning Bitcoin and its transactions has cited two laws, NRB act of 2058 BS. It says that you can’t have bitcoin transaction in Nepal or use bitcoin to exchange foreign or Nepali currency, because bitcoin is not classified as a currency by Nepal Government, and hence using the internet for bitcoin transactions or exchange is illegal.
- Lack of regulations: NRB and Nepal govt is unable to have proper control over bitcoin transactions, as it’s mostly done over internet and Nepal doesn’t yet have the technology needed to regulate it, and hence it may be banned.
- Use in illegal activities: A lot of Reports of bitcoin being used for money laundering or making black money into white by converting into Bitcoin, among other cases is another reason.
- Damage to Nepali economy: Bitcoin transactions unlike other banking transactions can’t be taxed, so there will be loss of revenue, plus if more Nepalis use bitcoins, the monetary system of Nepal may be affected, Bitcoin is also a very volatile currency with lots of ups and downs and long term it can cause severe problems. NRB is tasked with maintaining the financial stability of Nepal, and maybe it felt, bitcoin was a threat.
The Nepali laws as it currently stands don’t allow it, plus the central bank feels that bitcoin can’t be appropriately regulated, can be used in illegal activities, and long term may damage Nepali economy. Recently, intense action has been taken by Nepal govt against bitcoin transactions, including arresting people involved in mining bitcoin, having large amounts of bitcoin, Nepal’s largest bitcoin exchange operator Bitsewa shut down and its owners arrested, even one Nepali politician from a minor party was also arrested for bitcoin trading.