Nepal’s Financial Intelligence Unit (FIU), in its Strategic Evaluation Report 2024, revealed that the country’s blanket ban on crypto trading has turn into a major obstacle for fraud victims in search of to report their cases to authorities.
Digital Asset Ecosystem In Nepal At A Glance
The FIU is a division of Nepal Rastra Bank, the country’s central bank. It monitors and reports suspicious transactions, particularly those linked to illicit activities comparable to money laundering and terrorism financing.
The report highlighted a rise in fraudsters using techniques like “smurfing,” where large transactions are divided into smaller amounts to avoid detection. Moreover, these fraudsters convert illicit funds into digital currencies, making it harder for authorities to trace or freeze the assets.
The FIU further emphasized that many individuals are deceived into investing in digital assets with guarantees of extraordinary returns. The report noted:
The advertisements direct the potential prey to deposit amount in certain bank accounts or wallet accounts. The quantity thus deposited is later not returned as promised. In countries like Nepal where investment in virtual assets like cryptocurrency is unlawful, the victims rarely give you complaints against such scams for potential repercussions.
Nepal banned digital asset trading and mining in September 2021. Subsequently, in January 2023, the Nepalese Telecommunications Authority ordered web service providers (ISPs) to dam access to all crypto-related web sites, including trading platforms.
Social media and online advertisements are key channels through which fraudsters lure unsuspecting victims into fake digital asset investment schemes. Nonetheless, the illegal status of digital asset trading in Nepal has discouraged victims from reporting these incidents to law enforcement, further enabling scammers.
The FIU has called for stricter oversight of crypto transactions within the country to curb these fraudulent activities. The report also underscored the importance of accelerating public awareness, fostering inter-departmental cooperation, and making a balanced regulatory framework to handle crypto-related fraud more effectively.
Crypto Regulations In South Asia
Nepal is one in every of the few countries, alongside China, Russia, Iran, Bangladesh, and others, to ban all digital asset trading activity. Nonetheless, other South Asian countries have adopted various approaches toward digital assets.
For example, digital asset trading just isn’t outright banned in India. Nonetheless, the country has imposed high tax on profits arising from crypto trades, without the choice of using losses to reduce potential tax liabilities.
In contrast, Pakistan recently took a major regulatory turn by legalizing virtual assets, a radical departure from its earlier anti-crypto stance. Nonetheless, analysts imagine this policy shift primarily goals to introduce a central bank digital currency (CBDC) reasonably than fully embracing decentralized cryptocurrencies.
Bhutan is probably essentially the most pro-crypto country within the region. The nation’s total BTC stash recently crossed $1 billion, bolstered by the cryptocurrency’s price appreciation. BTC trades at $89,856 at press time, down 0.9% prior to now 24 hours.
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