The much-hyped term “cryptocurrency” remains foreign to many Nepalese. It is also because there is no law yet in Nepal that directly deals with such a thing. Moreover, cryptocurrency transaction is still legally questionable in Nepal.
So here we will explain what cryptocurrency means as far as Nepalese law is concerned.
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What is Cryptocurrency?
Simply put, a cryptocurrency is a cryptographically secured digital or virtual currency, based on the blockchain, which makes it nearly impossible to counterfeit. Blockchain is a distributed database shared with the node of computer networks. But some philosophers also say that there is no such thing as a cryptocurrency or a wallet, and it is simply an agreement between the networks on the ownership of the currencies.
What is bitcoin?
Bitcoin is one such cryptocurrency, which is highly valued and considered to be one of the most valued currencies in existence. Bitcoin can be received through mining or can be purchased from cryptocurrency exchanges. Mining is the process by which new Bitcoins come into circulation.
In this process, one has to solve a computer puzzle by downloading software that contains a partial or complete history of transactions that have occurred in its networks. The number of Bitcoins is limited to 21 million coins.
Why its advantages?
The growing acceptance of cryptocurrencies has created a reluctance among mankind for the use of paper money, as the latter requires them to pay additional service chargers to the middleman for his services. Unlike paper money, cryptocurrencies include cheaper and faster money transfers and decentralized systems that don’t collapse at a single point of failure. Additionally, crypto activists believe that by replacing centralized paper money with all cryptocurrencies, it will be easier for a country to get rid of corruption. They see it as a form of political and social activism.
Why is cryptocurrency controversial then?
But, again, the use of cryptocurrencies is blamed for an increase in criminal activity in society. A report by a crypto asset company estimates that nearly 80% of all initial coin offerings (ICOs) launched in 2017, such as the issuance of new cryptocurrencies, were fraudulent. Moreover, the Bitcoin price fluctuates wildly and many people have lost money due to this. Crypto wallets are difficult to understand and use, and fraudulent transactions are difficult to undo.
What does Nepalese law say about this?
Cryptocurrency issues were revealed in Nepal after Nepal Rastra Bank issued a notice on August 13, 2017, restricting all Bitcoin transactions in Nepal. However, the advice was issued without proper research, legal acceptance and assessment of its implications.
First, the notice only made the Bitcoin transaction illegal, leaving all other cryptocurrency transactions unpunished. This evidence lacks the seriousness of the central bank when it comes to cryptocurrencies.
Secondly, the notice was published being allied on the “exchange”. This is where the confusion regarding Bitcoin lies.
Bitcoin has no central authority to regulate it and is instead a decentralized digital currency traded from person to person and not through banks. It has no issuing or regulating country, and these Bitcoins are converted into US dollars simply because dollars are used as an international exchange rate. Proponents of cryptocurrencies argue that due to the decentralization created by Bitcoin, a paradigm shift of centralized currency is occurring which bypasses a middleman for centralized currency exchange, also a main reason for the innovation of cryptocurrencies. cryptocurrencies. Therefore, the verification transaction of Bitcoins by Nepal Rastra Bank under the Foreign Exchange Regulations 1962 is wrong.
Moreover, the NRB’s claim that its legislation in 1962 had already incorporated the concept of Bitcoin, which was in fact introduced in 2009, gives ample reason to suspect the intent and seriousness of the central bank.
Lastly, whenever the Nepalese government prosecutes Bitcoin-related crimes, it has been found using various legislations. For example, in some cases prosecutors refer to Nepal’s Rastra Bank Act in their indictments while others refer to the Banking and Financial Institutions Act. Such inconsistency and unpredictability paint a picture of low understanding of cryptocurrencies among government lawyers.
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Cryptocurrency In Nepali Law: Your Frequently Asked Questions Answered
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