Is Bitcoin legal in Nepal? How can I mine it?

Since the sudden rise in the value of Bitcoin in the last 5 years, virtual currency phenomena has recently garnered a great deal of media and regulatory attention. However, many people do not understand what virtual currency, let alone Bitcoin, is and how it works. In context of Nepal, this is even more pronounced.

In the digital age, hard cash is becoming more exotic. Bills and coins make up just 7 percent of the money in circulation in the U.S. A poll released this May by the Rasmussen Report confirms Americans’ dwindling reliance on physical currency: 43 percent have gone a full week without paying for anything with cash or coins.

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The Nepal Scenario:

From the hassle between Mahabir Pun and the government regarding the licensing of Wifi back in 2006 to the introduction of ATMs and widespread use of Digital Payment Portals such as eSewa and Khalti today, the waves of technological revolution can be seen in Nepal. The nature of money is also changing as people have started using digital payment portals more. Beyond digital payments, there lies cryptocurrency which is not widely understood and if tried, limited to bitcoins only in the main scene.

Krishna Bahadur Mahara, the then Finance Minister of Nepal had stated during a 2017-2018 budget speech, that if virtual currencies are to be regulated the Nepalese government will monitor users. Without arguing on monitoring, the comparative study of Estonian and Canadian monitoring systems can shed more light on this. However, given the bias Nepalese people have of their political leaders based on their ‘Melamchi’ nature, it is very highly doubtful that real action will be taken soon other than speeches.

Cases involving Bitcoin:

Seven individuals were arrested in the first week of October 2017 for running illegal bitcoin exchange operations in Nepal. According to Nepal’s Central Investigation Bureau (CIB), the suspects were trading bitcoins without authorization and the agency’s Deputy Superintendent of Police (DSP), Jeevan Kumar Shrestha says this is one of the first cryptocurrency arrests of this magnitude.

As per the press release of CIB, because the act committed by the arrested people was contravening with the Nepal Rastra Bank Act, 2058 B.S., they had been arrested and were in the investigation process.

Currently, there are three cases regarding bitcoin and cryptocurrencies in Nepal. The one involving the seven arrests (074 – CR – 0467), the case involving Bitsewa (074 – CR – 0562) and there is a writ petition in the Supreme Court (074 – WO – 0655) registered on 12th Chaitra of 2074. None of the cases have been decided as of now.

Whether the Judiciary of Nepal decides the cases the way it can be referred in World Scenario and even be helpful in resolving the Indian Cases or not is another question which will be resolved, hopefully, timely.

Legality

Providing that there is the clear rule under Nepal Rastra Bank Act, 2058 B.S. and Foreign Exchange Regulation Act, 2019 B.S. that Foreign Currency Transactions can only be done by taking permission from Nepal Rastra Bank and since Bitcoin has not yet gained legal recognition as currency, Nepal Rastra Bank, in its notice dated 13th August 2017 has stated Bitcoin to be illegal.4 The Bitcoin charge sheet asks for punishment under section 96(1) of the Nepal Rastra Bank Act which is associated with an offense under section 95.

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