Kathmandu: Even though trading in virtual assets such as cryptocurrencies is completely banned in Nepal, their illegal use and the financial risks they pose have grown alarmingly large.
A newly released “Strategic Analysis Report 2025” by the Financial Information Unit of Nepal Rastra Bank reveals a sharp rise in suspicious financial activities linked to cryptocurrencies across the country.
The report highlights that young people, students, and salaried workers have become prime targets of these illegal operations. It shows that the formal banking system itself is increasingly being misused as a channel to move and manage proceeds from fraud and illicit crypto-related activities.
According to the report, a total of 658 suspicious transaction reports related to cryptocurrency were recorded between 2021 and mid-July 2025. The year-on-year growth is striking. Only 13 such cases were reported in 2021, rising to 173 in 2022, 138 in 2023, and peaking at 252 in 2024. By July 16, 2025 alone, 82 cases had already been logged.
More than 91 percent of these reports, or 600 cases, originated from commercial banks. This indicates that while crypto buying and selling may occur through informal or underground channels, the actual flow of money continues to pass through legitimate bank accounts.
Out of the total reports received, 321 cases were forwarded to investigative authorities for action. Nepal Rastra Bank’s Financial Information Unit sent 232 cases to the Nepal Police, 115 to the Department of Revenue Investigation, and six to the Department of Money Laundering Investigation. A smaller number were also referred to the central bank’s payment systems department and the Inland Revenue Department.
The analysis shows that Nepal’s youth are particularly vulnerable. Around 75 percent of individuals involved in suspicious crypto-related transactions fall within the 21 to 35 age group. Those aged 21 to 25 account for 20 percent, those between 26 and 31 make up 35 percent, and individuals aged 31 to 35 represent another 20 percent.
In terms of occupation, students comprise 29 percent of those involved, followed by salaried employees at 21 percent. Entrepreneurs account for 19 percent, while those engaged in foreign employment make up 9 percent. The report notes that despite being digitally savvy, many in this group lack financial literacy, making them easy prey to “get-rich-quick” schemes. In many cases, they are unknowingly used as money mules, allowing others to operate their bank accounts or renting them out for small commissions to move fraudulent funds.
The report also outlines new patterns of criminal activity emerging through the use of cryptocurrencies in Nepal. One common method involves combining informal money transfer systems with crypto settlements, where funds sent from abroad are converted into crypto and then distributed in cash through local agents, directly affecting the country’s foreign exchange reserves.
Another growing trend is online fraud linked to dating apps. Criminal networks have been using platforms such as Mitu to emotionally manipulate victims and persuade them to invest in cryptocurrencies, resulting in losses worth millions of rupees. The report cites a recent case in Lalitpur, where an illegal call center was involved in such scams and police arrested 52 people, including six Chinese nationals.
Family bank accounts are also being misused. In one case from Kailali, multiple bank accounts opened in the names of family members were used to conduct crypto transactions worth around Rs 370 million, dragging the entire family into legal trouble.
Online gambling has emerged as another major channel, particularly involving IT engineers and technically skilled individuals who use cryptocurrencies from within Nepal to participate in international betting platforms. The report also points to a rising trend of fraud disguised as legitimate business activity, where registered software firms or consultancy offices are used as a front for crypto trading or mining operations.
Despite the blanket ban, the central bank’s assessment concludes that crypto-related transactions are continuing to grow underground, indicating that prohibition alone is not an effective solution. As a result, Nepal Rastra Bank has signaled the need for a shift in strategy.
The report recommends stronger monitoring in line with Financial Action Task Force guidelines, including mandatory tracking of both senders and recipients involved in crypto-linked transactions. It calls for an urgent, comprehensive assessment of Nepal’s actual exposure to crypto-related risks, stricter scrutiny of frequent small-value transactions marked with vague descriptions such as “loans” or “repayments,” and the provision of advanced blockchain analytics tools to law enforcement and revenue investigation agencies.
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