How Nepalis Use Cryptocurrency Despite Complete Ban

Every day, thousands of Nepalis send money home to their families. Not through banks. Not through Western Union. Not through the official channels the government insists on. They use cryptocurrency - even though it’s completely illegal.

Nepal has one of the strictest crypto bans in the world. Since September 2021, the Nepal Rastra Bank (NRB) has made it clear: no trading, no mining, no payments, no wallets. Not even for personal use. The law is absolute. Violators face up to three years in prison, fines up to three times the value of the crypto involved, and the government can seize your phone, laptop, or bank account if they suspect you’re involved.

And yet, crypto is everywhere.

You won’t see ads for Binance or Coinbase in Kathmandu. You won’t find crypto ATMs on the streets. But if you know where to look - in WhatsApp groups, in encrypted Telegram channels, among university students in Pokhara, in the back rooms of electronics shops in Birgunj - you’ll find people trading Bitcoin, USDT, and Ethereum like it’s just another currency. They’re not doing it for speculation. They’re doing it because they have no other choice.

Why Remittances Drive the Underground Crypto Market

Nepal relies on remittances like no other country. Nearly 25% of its GDP comes from money sent home by Nepalis working abroad - mostly in Malaysia, Qatar, Saudi Arabia, and the UAE. In 2024, that totaled over $10 billion.

Traditional remittance services like Wise, MoneyGram, and Xoom charge high fees - often 6% to 10% per transfer. They take days to clear. They require bank accounts, IDs, and paperwork. Many workers don’t have those. Many families back home don’t either.

Crypto changes that. A worker in Dubai can buy $500 worth of USDT on a peer-to-peer exchange, send it instantly to their sister in Lalitpur via a crypto wallet, and she can cash out through a local agent - no bank needed. The fee? 1% to 2%. The time? Under 10 minutes.

This isn’t theory. It’s survival. And it’s why crypto use has exploded despite the ban.

How They Do It - The Hidden Methods

No one talks openly about how they do it. But from interviews with users, tech workers, and local journalists, a pattern emerges.

Peer-to-peer (P2P) trading is the backbone. Platforms like LocalBitcoins and Paxful are blocked in Nepal, so people use Telegram bots. A buyer in Kathmandu messages a seller in Pokhara: “I need 100 USDT, cash on delivery.” The seller sends the crypto from their wallet. The buyer meets them at a café, hands over NPR 13,500 in cash, and the transaction is done. No paper trail. No bank record.

Prepaid cards and mobile money bridges. Some users load crypto onto prepaid cards issued by foreign exchanges, then use them to pay for goods or services online. Others convert crypto to mobile money via agents who partner with eSewa or Khalti - the two dominant digital wallets in Nepal. The crypto goes in, cash comes out. It’s messy, but it works.

Family-run networks. In rural areas, older relatives often don’t know what Bitcoin is. But they know their child abroad sends money - and it arrives faster, cheaper, and more reliably than ever before. They don’t ask how. They just accept the cash.

Police have cracked down. In 2023, a 22-year-old student in Biratnagar was arrested for facilitating P2P trades worth $12,000. In 2024, a crypto mining operation hidden in a basement in Lalitpur was raided. Six people were charged. But these are drops in the ocean. For every arrest, a dozen new users join.

The Government’s Dilemma

The NRB claims the ban protects citizens from fraud and money laundering. They point to past scams - like the 2019 Ponzi scheme that stole over $50 million from Nepali investors. They’re right to be cautious.

But the ban also protects the banks. And the middlemen. And the fees.

Traditional remittance companies pay millions in lobbying fees. Banks profit from holding foreign currency reserves. The government collects taxes on every wire transfer. Crypto cuts them all out.

So instead of regulating, they’re building their own digital currency - a Central Bank Digital Currency (CBDC) - set to launch in 2027. It will look like crypto. It will work like crypto. But it will be controlled. Every transaction tracked. Every wallet monitored.

It’s not innovation. It’s control.

Who’s Using It - And Why They’re Not Stopping

It’s not just the poor. It’s not just the unbanked.

It’s engineering students in Kathmandu who want to learn blockchain. It’s nurses in Qatar who send money home to their parents. It’s tech startups in Birgunj trying to pay freelancers abroad without waiting weeks for bank approvals.

And it’s the youth. Over 60% of Nepal’s population is under 30. They’ve grown up with smartphones, TikTok, and global internet access. They know how the world works. They see crypto as a tool - not a threat.

When asked why they risk jail, one 19-year-old from Dharan told a journalist: “I don’t care if they lock me up. I just want to send money to my mom without paying 10% of her food money to a company that does nothing.”

That’s the real story. Not law. Not fear. Not even greed. It’s dignity.

The Risks - And Why No One Talks About Them

There’s no safety net.

If you get scammed on a P2P trade, you can’t go to the police. If your wallet is hacked, you can’t get your money back. If you’re arrested, you’re on your own. No legal aid. No consumer protection. No recourse.

Some users keep small amounts - just enough to cover a monthly remittance. Others go all in. They borrow money to buy Bitcoin. They trade on unregulated apps. They get caught in phishing scams. There are stories of people losing life savings. Of families breaking apart over crypto debts.

But they still do it.

Because the cost of doing nothing is higher.

What Happens Next?

The ban won’t last forever.

It’s not a question of if - it’s a question of when. And how.

Either the government realizes that outlawing technology doesn’t stop demand - it just pushes it into the dark - or they double down on surveillance, arrests, and censorship.

The CBDC might look like a solution. But if it’s just another way to control money instead of empowering people, it won’t fix the problem. It’ll just replace one system with another.

What Nepal needs isn’t a new currency. It’s a new mindset.

People aren’t breaking the law because they’re reckless. They’re breaking it because the system failed them.

And when people have no other way to survive - they find one. Even if it’s illegal. Even if it’s dangerous. Even if it means risking everything.