There has been a lot of noise over cryptocurrency in Nepal and in foreign countries these days. Nobody has seen what cryptocurrency looks like. But it is working anyway. It is also scaring many. They call something that scares people like a ghost. This must mean that cryptocurrency is itself a ghost!
NRB has been issuing notice after notice, calling all kinds of cryptocurrency transactions illegal. But no matter how many notices the NRB issues, capital flight has not been stopped. Neither can anyone stop it from flying. Because the capital has feathers on it and no one has seen it. So it is another ghost!
Similarly, though cash is coming to the country from abroad, the government bodies concerned are unaware of it. How would they know? Because its very name is ‘crypto’ which means ‘a secret’! Nobody knows about it except for the person carrying out the transaction. Very much like the behind-the-curtain shenanigans of our politicians!
There are people who claim to have profited out of their investments in crypto or Hyperfunds. It’s not known right now if such claims are true or not. But I have an important message to convey to all those concerned – the government is not going to come to your rescue if you lose all you have by investing in crypto, led on by the sight or rumours of others doing the same!
But it seems cryptocurrency transactions are not going to be affected just because of the ‘crypto is banned’ diktats from the NRB. Rather, cryptocurrency is going to affect central banks of almost all countries. Because, though it is not issued by any ‘authorised’ entity, cryptocurrency transactions are growing across the world. El Salvador has already legalised cryptocurrency. In the developed countries like the USA, it is being used like real money. Some people have already started calling cryptocurrency the currency of the new era. China has banned cryptocurrency while India has taxed it heavily. Yet the investment in cryptocurrency in these two immediate neighbours of Nepal has been growing and they are unable to control it. In such a situation, how can we even expect the NRB to do so?
Either because they fear the popularity of cryptocurrency or they are scared that the entire monetary system would slip out of their control due to cryptocurrency, the central banks in many countries are preparing to issue their own digital currencies. Our NRB, too, is about to complete a study regarding this issue. At least that is what the NRB high officials say. But the fear lies in what’s going to happen if the study too lies gathering dust and without implementation, as our five-year plans, and the ‘crypto criminals’ succeed in drying up the remittance inflow to Nepal?
You cannot rule out this possibility simply because at present, while sending remittance to Nepal, the Nepali abroad have to pay a heavy ‘cut’ to middlemen. What will the NRB do if, in the days to come, the Nepali in foreign countries decide to opt for cheaper technologies like blockchains to send money back home, thinking there is nothing wrong with that? This is the real worry!
The country’s remittance companies face a grave accusation – that they keep the amount deposited by migrant Nepali workers in US dollars abroad, and pay the workers’ beneficiaries back in Nepal in the Nepali currency. The NRB doesn’t seem to be able to do anything about it. There is simply no sign of the cryptocurrency transactions receding or declining even if the NRB claims that it has been “monitoring the situation closely” or even if it embraces a policy of bringing in remittance through the blockchain technology. The news of Nepali living abroad investing in cryptocurrency has been coming from time to time. Though many still consider investing in cryptocurrency as a form of gambling, what can our government possibly do if the Nepali abroad start taking the fluctuations in the price of cryptocurrency as normal and start accepting it?
Another thing is that people across the globe have started taking cryptocurrency as a new instrument of investment, irrespective of the fact that many countries are divided over whether to legalise cryptocurrency as it is not guaranteed by the central bank of any country. For example, there are a lot of people in India who have invested in it. India which was hell-bent on not legalising cryptocurrency recently permitted payments through cryptocurrency, imposing as high as a 30 percent tax on all incomes made through cryptocurrency. There are no signs, however, that the government in Nepal, which always sings the song of open market economy, will easily give up its closed-doors policy in practice that easily! And as long as the government doesn’t do that, the crypto problem will not be resolved. This is my assertion. I think the NRB and the Finance Ministry know very well what I mean!
And again, they say crypto comes with several advantages. Mainly that the mining of cryptocurrency doesn’t harm our country which has excess electricity already or will be in that situation in just a couple of years. Crypto mining increases electricity consumption. At some places, it has caused air pollution as people there are mining cryptocurrency using electricity produced through diesel generators. But as users of clean electricity, we are panicking at the mention of crypto and are trying to bolt our doors. As if one can!
An open economy and the closed-door policy are arch-enemies. In fact, the closed-door policy provides fertile soil for cryptocurrency to grow. According to the Act Restricting Investment Abroad (ARIA) 1964, Nepali are not allowed to invest abroad. But there are those who have been doing so. Why can’t the government stop them? Why make a law when you can’t implement it? How did some Nepali become rich abroad within no time? What’s more, some have started holding the marriage ceremonies of their children in foreign countries. The USD 500 that the NRB allows the Nepali going abroad to carry with them is certainly not enough to hold such grand celebrations? When the government doesn’t give you an easy legal way, people are forced to seek roundabout routes such as hundi or they have to take the help of cryptocurrency which they mine through their computers! It’s fair to assume that our hakim saaps already know what lies at the crux of the matter of cryptocurrency!!
Another thing is where are those who have some money that they can be expected to invest? And where can they invest? Starting an industrial unit is not feasible these days as the land price has skyrocketed. So, where do you set up your industrial plants? Transportation has become much dearer as fuel prices have continued to rise. The price of almost everything has gone up significantly. So, where on earth are you supposed to sell Nepali products which are not competitive price-wise? The Nepali toil hard in foreign lands to send some remittance back home but again send the same money abroad to import various goods, remaining empty-handed at the end.
It is said, the world is on the threshold of a fourth industrial revolution. What that means is today is the age of big data, nano technology, artificial intelligence and blockchain technology. Nepal has already missed the opportunities brought in the past by the previous three industrial revolutions. Therefore, those in the know say that Nepal should not miss this chance brought in by the fourth industrial revolution in this age of information technology. But the trouble is, when will our hakim saaps understand all this, if ever? Or will they just end up, like always, chasing ghosts?