Crypto Currency And Its Effect In Nepal

Crypto Currency And Its Effect In Nepal

May 9, 2022, 8:21 a.m.

What is crypto currency?

Cryptocurrency is a type of digital currency. The term comes from the fact that all of its transactions are highly encrypted, ensuring that the transactions are safe. Unlike traditional currencies, which are regulated and controlled by a central body, it is decentralized. A crypto currency's supply is limited, and it is sometimes compared to precious metals such as gold and silver. Crypto currency is generated by mining, which is a process in which powerful computers solve very complicated tasks in exchange for a reward for successfully completing cryptocurrency transactions. To put it another way, digital currency exchanges frequently result in the introduction of new crypto currency into the marketplace.

Crypto currency in Nepal.

Crypto currency is a new field of expanse for the Nepal Government. It has taken a massive surge in the recent years. However, the Nepal Rastra Bank (NRB) issued a regulation a few weeks ago banning all Nepali nationals from purchasing or investing in crypto currencies. Given earlier NRB statements, this came as no surprise. This was not the end of the outcome though, foreigners living in Nepal are also prohibited from trading in crypto currencies, according to the government.

This was followed by a succession of news items, which were all clearly given to the media by authorities, concentrating on the use of crypto currency to mislead those trying to relocate for job as well as to further capital flight.

While typical bank activities are not available to the public, the account's ownership may be traced to a specific person in the real world. All transactions in the early, and still most popular, cryptocurrencies are available to the public. However, determining who owns the account is challenging. Newer approaches are addressing this relative lack of transactional privacy.

Because there is no central regulator or even a tangible asset, those who are breaking the law realize that law enforcement cannot readily freeze accounts. As a result, it's probable that Nepalese authorities are reacting to a rise in unlawful activities aided by the benefits of cryptocurrency.

The Nepalese government has stated that the recent reduction in remittances is due to crypto currency investment. The argument is bolstered up by the fact that foreign exchange reserves are dwindling, however this isn't enough to prove that it's related to crypto investments. When it comes to a crypto-based market, traditional techniques of governing the economy become useless.

Cryptography must be regulated. However, the Nepalese government lacks competence in both regulating and, more significantly, banning cryptocurrency. It can be devastating to the country's economy if correct measures are not implemented. Traditional means of following investors using secondary data can assist follow a few, but the crypto economy will continue to thrive while the central banking system suffers.

The government has been concentrating its efforts on disrupting the network based on secondary research and monitoring transactions made through financial channels. The Nepal Rastra Bank, the country's central bank, has ordered banks to provide the transaction histories of customers who have withdrawn or deposited more than Rs 7 lakhs in cash. In the previous six months, a large number of people will have withdrawn or deposited such a sum. It's like looking for a needle in a haystack when it comes to analyzing individual transactions and locating crypto investors. This is a classic example of the government working hard but not clever enough, because people will always find a method to get around a regulation that was badly written and enforced.

Monitoring banking data is not only a waste of time, but it also provides traders with just an opportunity to safeguard their transactions and become less careful. The examination of financial data may aid in the surveillance of a few traders, but it will not result in the establishment of a system that can continuously follow, monitor, and manage the crypto trade. Because it is clear that these transactions take place outside of the banking system, the government should instead concentrate on developing a system for the future that would track just such transactions and use them to sanction previous ones.

While banning crypto currency is not the best idea, it is the government's sole alternative for streamlining the economy. Crypto investors must be banned and penalized, which necessitates a greater awareness and expertise of cryptocurrency. Instead, it would be wonderful if the government could create a system that allowed people to pay a crypto-tax or apply for a crypto-license. As a result, the underground economy and the regular economy may continue to profit from each other and thrive.

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