Crypto Asset Forfeiture Rules in Nepal 2025

• By JayKay Sun
• 27 Nov, 2024
• 17 Comments

TL;DR

• All crypto activities are illegal in Nepal under the Muluki Criminal Code Act 2017.
• Violations are treated as criminal offenses and can trigger asset forfeiture.
• Forfeiture follows standard criminal asset seizure procedures - court order, seizure, valuation, and auction.
• Fines range from NPR 500,000 to NPR 5,000,000 plus up to ten years imprisonment.
• Only a handful of emerging markets maintain a total ban; Nepal is one of them.

Why Nepal’s Crypto Ban Matters

When you hear cryptocurrency is a digital token created using cryptography that can store value and you wonder if you can trade it from Kathmandu, the answer is a firm “no.” The Nepalese government has kept a hard line since 2017, and the crackdown intensified after the Nepal Rastra Bank the central bank that issues the Nepalese rupee and regulates financial institutions issued a public warning in 2021.

The Legal Backbone: Muluki Criminal Code Act 2017

The core of the ban lives in Muluki Criminal Code Act 2017 a comprehensive criminal statute that defines offenses and penalties in Nepal. Section262(A) explicitly labels any “information, code, token, or virtual asset created electronically through cryptography that has commercial significance or can store value” as cryptocurrency and declares its creation, possession, mining, trading, or storage a criminal act.

Violators are prosecuted under both this code and the country’s anti‑money‑laundering (AML) legislation, which treats crypto assets as proceeds of crime. The Nepal Telecommunication Authority the regulator that oversees internet and telecom services backed the legal stance by blocking crypto‑related websites in 2021, showing the government’s willingness to use technical tools alongside courts.

What Exactly Triggers a Violation?

Any of the following actions can land you in trouble:

• Running a mining rig, even on a personal laptop.
• Buying, selling, or swapping tokens on foreign exchanges while in Nepal.
• Holding crypto wallets that contain any amount of digital assets.
• Providing custodial services or advising others on crypto investments.

The law does not differentiate between small hobbyists and large traders - the act itself is illegal.

Asset Forfeiture: From Theory to Practice

While Nepal’s statutes do not spell out a crypto‑specific forfeiture regime, the general principle is clear: any asset linked to a criminal offense can be seized under the country’s criminal asset forfeiture the legal process that allows the state to take ownership of property involved in or derived from a crime. Here’s how it typically unfolds:

1. Investigation. Law enforcement agencies, often the Central Investigation Bureau, trace digital transactions using blockchain analytics, request wallet addresses from exchanges, and coordinate with the NRB.
2. Seizure. Once a wallet is identified, authorities can freeze the private keys or physically seize hardware storing the keys. The seizure order must be signed by a magistrate.
3. Valuation. Experts assess the market value of the crypto at the time of seizure. Because crypto prices are volatile, courts may use an average price over a 24‑hour window.
4. Court Decision. A judge reviews the evidence and decides whether the assets are lawful proceeds. If convicted, the assets are declared forfeited.
5. Disposition. Forfeited crypto is usually liquidated by the state through a public auction, with proceeds going to the national treasury.

In practice, the process mirrors the handling of cash, gold, or property linked to drug trafficking or fraud. The lack of a dedicated crypto‑forfeiture law means the procedure can be slower, and courts sometimes grapple with technical questions about private‑key custody.

Penalties You’d Face

The legal documents list a range of punishments. Below is a quick snapshot:

Real‑World Implications for Individuals and Businesses

Imagine you’re a tech startup in Pokhara wanting to experiment with blockchain for supply‑chain tracking. Even if your use case never involves a token, the moment you store a private key or test a smart contract, you step into the legal gray area. Most companies choose to relocate their blockchain labs to Singapore or Hong Kong to avoid the risk.

For everyday users, the threat is less subtle. A Nepali student who bought a few Bitcoin on an overseas exchange could have their laptop seized, face a criminal case, and lose the crypto through the state auction. The risk isn’t theoretical; the NRB’s 2021 press release warned that “any individual found in possession of virtual assets will be subject to prosecution and possible asset forfeiture.”

Checklist: Staying Safe If You’re in Nepal

• Do not download mining software or join mining pools.
• Avoid holding any crypto wallet on personal devices.
• Do not engage with foreign exchanges while physically present in Nepal.
• If you already own crypto, consider moving the assets to a jurisdiction with clear legal frameworks.
• Stay updated on NRB advisories - they publish quarterly warnings on prohibited financial products.

What Might Change in the Future?

As of October2025, the Nepali government shows no sign of softening. However, regional pressure is mounting. India is drafting a regulated crypto‑exchange framework, and Bangladesh recently introduced a sandbox for blockchain pilots. If Nepal ever wants to join the digital economy, it will likely need to craft a nuanced law that separates “digital tokens used for illicit purposes” from “blockchain applications for public good.” Until then, the current stance - and the associated crypto asset forfeiture risk - is here to stay.