Nepal Rastra Bank (NRB) has suggested people not to get involved in cryptocurrency, related investments and network marketing as they are tempted to earn a lot in a short period of time. The Nepal Rastra Bank (NRB) has issued a statement warning that Nepalis living in Nepal or living abroad have been engaging in such business for some time now. The NRB has stated that there is a high risk of drowning in such business or business which is not recognized by the law and action may be taken as it is illegal.
A statement issued by Nepal Rastra Bank said, "As cryptocurrency is not recognized in Nepal as per Foreign Exchange (Regulation) Act, 2019, currency or foreign currency or foreign exchange is prohibited to be used for payment, exchange or as a monetary instrument." The second type of centralized virtual currency and decentralized virtual currency that can be traded electronically is called cryptocurrency. Cryptocurrency can be exchanged without the intervention of any financial institution and it involves anonymous transactions using cryptography.
Its accounting is done through decentralized blockchain technology and not by any bank or special institution. As of January 2022, it is estimated that there are more than 8,000 cryptocurrencies, according to NRB. Of these, Bitcoin is the first and most widely used cryptocurrency. The NRB has stated that no country other than El Salvador has given legal recognition to cryptocurrency transactions. Some other countries have not recognized it as a currency but have legalized its mining, buying and selling and ownership as a digital asset, according to a NRB statement.
But due to lack of law in Nepal, it has not been recognized as a digital asset so far. NRB has clarified that investors do not have any special regulatory or legal remedy in case of any problem or dispute related to the user or business. The NRB has stated that investments related to cryptocurrency can be used for terrorist activities and as a means to launder assets obtained from criminal activities and for tax evasion.
As the Foreign Exchange (Regulation) Act, 2019 is also appealing to Nepalis living abroad, it is illegal and punishable to take capital money from Nepal to invest abroad or to facilitate them to invest abroad by soliciting money from relatives and friends living in Nepal. . The use of cryptocurrency could lead to illegal activities such as fraud and tax evasion, adversely affect financial stability, and affect the effectiveness of monetary policy as it is beyond the control of the central bank, the NRB said.
NRB claims that such business could lead to capital flight, reduce remittances and negatively affect foreign exchange reserves, and attract more young people to the business, adversely affecting their personal lives and the country's socio-economic system. Similarly, NRB has recently warned that organizations like Jocial, HyperFund, Crowd One and Solemax Global are conducting network marketing in the name of marketing companies in Nepal.
The central bank fears that multi-level marketing (MLM) is on the rise due to the development of information technology and increased access to the internet. Network marketing is such a business; In which new customers are encouraged to become members and sell more products or services. Commission has been arranged for that. New entrants to such businesses are more likely to be deceived.
