Nepal banned crypto, but crypto did not leave Nepal.
"Flows of stablecoins and unbacked crypto assets grew markedly between 2019 and 2024, although adoption remains modest relative to peers, despite legal prohibition on crypto transactions," the IMF wrote, adding that crypto adoption in Nepal "warrants close monitoring."
The finding came in the Fund's 2026 Article IV Consultation, published as its Executive Board completed the seventh and final review under Nepal's Extended Credit Facility on June 5.
Crypto inflows were negligible in 2020, then topped $2.6 billion in 2021, briefly exceeding 13% of GDP, according to IMF staff calculations.
Volumes fell to roughly 4% of GDP by 2023 before climbing back toward 8% in 2024, with stablecoins making up the larger and growing share.
On cross-border flows, the Fund pegged Nepal at around 5% of GDP in early 2025, ahead of Bangladesh and Myanmar but far behind Vietnam at roughly 26%.
The IMF wants a regulatory framework aligned with international standards, saying it "would help safeguard financial stability and integrity and consumer protection, while limiting circumvention of capital controls or large-scale deposit outflows."
The Fund also pushed Nepal to finish a Financial Action Task Force action plan and exit the watchdog's grey list.
Musheer Ahmed, founder and managing director of Finstep Asia, told Decrypt the ban-versus-regulate debate starts with a category error.
Ahmed said the use cases that persist, such as trading and remittances, are exactly the ones worth regulating.
"On the trading front, it does make sense to bring in regulations" for consumer and investor protection, he said, adding that regulators must balance oversight of cross-border payment rails against longstanding concerns around monetary risks and capital controls.
The IMF and crypto"I don't think the El Salvador experiment, per se, has any significant impact on either side," Ahmed said, adding that while it put the country on the map for virtual assets and drew crypto capital, limited adoption showed Bitcoin is used more as an asset than money.
The real traction, he said, is in payment rails, "especially the stablecoin sandwich, which has gained significant traction."
The unrest erupted after the government banned 26 social media platforms on September 4, drawing young Nepalis into the streets ahead of one of the deadliest crackdowns in years.
The Fund said it will keep engaging Nepal through post-financing assessment and annual Article IV consultations, with crypto oversight now on the agenda.
Decrypt has reached out to the IMF for comment.
