Suspicious ‘Virtual Asset’ Transactions on the Rise in Nepal

Suspicious transactions involving “virtual assets” are increasing in Nepal despite a government ban on cryptocurrency and other digital currencies, according to a government study.

Virtual assets include digital holdings such as cryptocurrencies, non-fungible tokens (NFTs), stablecoins and gaming tokens. All forms of virtual asset trading are prohibited in Nepal.

A study by the Financial Information Unit (FIU–Nepal), an autonomous body established in 2008 under Nepal Rastra Bank to analyse suspected money laundering and terrorist financing, concluded that the use of cryptocurrencies and stablecoins has heightened the risks of money laundering and cybercrime in the country. In a report released on Thursday, the FIU said the illegal use of virtual assets is emerging as a serious challenge to the financial system and stressed the need to strengthen regulatory oversight.

Although all virtual asset-related activities are legally banned, the report cites continued underground activities such as crypto trading, online gambling, hundi transactions, cyber fraud and investment scams. Ease of cross-border transfers, the ability to conceal user identities and weak regulatory mechanisms have made virtual assets attractive to criminals, the report notes.

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The FIU said suspicious transaction and activity reports linked to virtual assets have risen significantly in recent years. Only 13 such reports were received in 2021, but the number increased sharply from 2022 and peaked in 2024. Most of the reports were submitted by commercial banks.

Young people aged 21 to 30 account for the largest share of those involved in such suspicious activities, at 35 percent, the report says. By occupation, 29 percent were students and 21 percent salaried employees.

FIU Chief Basudev Bhattarai said the rapid emergence of virtual assets and virtual asset service providers has fundamentally transformed the global financial system while posing major challenges for regulators. He noted that virtual assets, in particular, are testing traditional financial systems, supervisory frameworks and law enforcement mechanisms.

The report also highlights the widespread use of fake job offers, work-from-home schemes, online gambling and high-return investment lures on platforms such as WhatsApp, Telegram and Facebook to collect personal and banking details.

Examples of virtual asset-related crimes

Case I: In Kailali’s Lamkichuha Municipality, the Department of Revenue Investigation filed a case at the Kathmandu District Court seeking Rs 370 million in fines after discovering that an individual had used bank accounts belonging to himself, his sister, his father and a friend for cryptocurrency transactions. The FIU’s analysis found that large sums were transferred through multiple accounts to conceal the true volume and source of funds and evade regulatory scrutiny.

Case II: Five youths were arrested from Anupam Tole, Pokhara, for involvement in online gambling and cryptocurrency trading. Investigators found they had conducted large financial transactions through multiple bank accounts opened in their own and relatives’ names. The group reportedly operated online gambling in three daily shifts, with transactions of up to USD 3,000 per shift, using platforms such as WhatsApp, Telegram and Cash App/Crypto App to reach users.

Case III: Nepal Police’s Central Investigation Bureau uncovered a gang operating in Nepal and India that defrauded victims of more than Rs 3 billion through phishing, social media and deceptive digital advertisements targeting bank and digital wallet users. Posing as bank or wallet staff, gang members obtained OTPs and PINs to gain illegal access to accounts and transfer funds.

Source: Virtual Asset: Strategic Analysis Report 2025