Despite a total ban on cryptocurrency since 2017, Nepali citizens are still buying, selling, and holding Bitcoin and other digital assets - quietly, secretly, and at serious risk. The Nepal Rastra Bank (NRB) made it clear: no mining, no trading, no holding. Violators face fines, imprisonment, and asset seizures. Yet, in the back alleys of Kathmandu, in encrypted WhatsApp groups, and through hidden P2P deals, crypto trading isn’t just alive - it’s thriving.

How People Bypass the Ban

You won’t find a single legal crypto exchange in Nepal. Binance, Coinbase, Kraken - all blocked. But that hasn’t stopped traders. Instead, they’ve built their own system. The most common method? P2P trading. People connect directly with each other through apps like Binance P2P, where buyers and sellers agree on a price and settle in Nepali rupees via eSewa, IME Pay, or bank transfer. No exchange handles the money. No digital trail leads back to the platform. It’s peer-to-peer, cash-like, and hard to trace.

To access these platforms, users rely on VPNs. The Nepal Telecommunication Authority (NTA) has blocked hundreds of crypto-related websites since 2021. But a good VPN costs less than $5 a month. Thousands use ExpressVPN, NordVPN, or local providers to mask their IP addresses and bypass the blocks. The government knows this. In 2025, NRB issued a new circular explicitly banning VPN use for crypto access - but enforcement is nearly impossible. How do you prove someone used a VPN? They’re everywhere, legal for work, and encrypted by design.

Communication happens on Telegram and WhatsApp. Groups are small, invite-only, and constantly changing names. One trader in Pokhara told me his group has 17 members. They meet once a week to swap addresses and payment screenshots. No names. No IDs. Just crypto addresses and bank receipts. If someone gets caught, they disappear - no warning, no farewell.

The Real Reason People Risk It

It’s not speculation. It’s survival.

Nepal receives over $8 billion in remittances every year - mostly from workers in Malaysia, Qatar, and the UAE. Sending money through traditional channels takes days, costs 8-10%, and requires paperwork. Crypto cuts that to hours and 1-2%. A worker in Dubai sends $500 in Bitcoin. His family in Dang receives it via P2P, converts to NPR, and uses it to pay school fees or buy medicine. No bank forms. No middlemen. No delays.

Young investors see crypto as their only shot at wealth. Stock markets are closed to most. Mutual funds require high minimums. Real estate is out of reach. Bitcoin, even in small amounts, feels like a lifeline. One 24-year-old from Birgunj told me he started with $20 in Bitcoin in 2022. Today, it’s worth over Rs 150,000. He doesn’t plan to cash out - he’s waiting. He knows the risk. But he also knows the alternatives are worse.

How the Government Is Fighting Back

The NRB isn’t just issuing warnings. They’re arresting people.

In July 2025, the Central Investigation Bureau (CIB) raided a grocery store in Lalitpur. Behind the shelves of rice and oil, they found servers, CCTV monitors, and records of over Rs 1.5 billion in crypto transactions. Two Indian nationals were arrested - not Nepalis. They’d been running a full-scale crypto exchange disguised as a small business. The case was filed under Nepal’s Criminal Code 2074 for illegal hundi (underground money transfer) and unauthorized use of virtual currency.

The government now monitors bank transactions for patterns linked to crypto. If you send Rs 50,000 to the same person every week, and they send it right back - that’s a red flag. Banks are required to report suspicious activity. The NRB works with anti-money laundering units to trace these loops. Even if you don’t use an exchange, your bank can get you.

They’ve also cracked down on crypto promoters. Instagram influencers who post “Earn Bitcoin with 5000 NPR!” now risk arrest. Ads for crypto education courses are being taken down. Even mentioning Bitcoin in public forums can draw attention.

The Human Cost

The fear is real.

One trader in Biratnagar was arrested in 2023 after a friend betrayed him. He spent six months in jail before being released on bail. His phone, laptop, and savings were seized. He lost his job. His family still doesn’t know the full story. He doesn’t trade anymore. But he still owns a small amount of Bitcoin - locked in a hardware wallet, buried under floorboards.

Another woman in Kirtipur uses crypto to send money to her daughter studying in Canada. She’s been doing it for five years. She never tells anyone. Not her husband, not her neighbors. She uses a different eSewa account for each transaction. She changes her WhatsApp number every three months. She sleeps with her phone under her pillow.

The psychological toll is heavy. Traders live in constant low-grade panic. Every notification from their bank. Every strange call from an unknown number. Every time their internet cuts out - they wonder: is this it?

Why the Ban Won’t Work

Nepal’s ban is one of the strictest in the world. But it’s built on a flawed assumption: that banning technology stops demand.

It doesn’t. It just drives it underground.

India banned crypto in 2018 - then reversed it in 2020. Now, it’s building a regulatory sandbox. Bhutan is testing a national blockchain. Even Pakistan, with its own economic chaos, allows crypto trading under license. Nepal is alone in its hardline stance.

The government fears loss of monetary control. They worry about capital flight. They say crypto is a tool for criminals. But the truth? Most users aren’t criminals. They’re students, workers, small business owners - people trying to survive in an economy that offers them few options.

The ban has failed to stop trading. It’s only made it more dangerous.

What Comes Next?

There’s no sign the government will soften its stance. The 2025 crackdowns show they’re doubling down. But enforcement is expensive. Surveillance is invasive. And the underground market keeps adapting.

New methods are emerging. Some traders now use crypto ATMs hidden in private homes. Others trade via gift cards - buying Bitcoin with Amazon vouchers, then selling the vouchers locally. One group in Butwal uses QR code swaps in public parks. No phones. No apps. Just a quick scan and a handshake.

The longer the ban lasts, the more sophisticated the workarounds become. And the more people get caught, the more others learn how to hide better.

Legal experts say pressure will grow. As global adoption rises and neighboring countries embrace crypto, Nepal’s isolation will become harder to justify. But for now? The ban stands. And the trade goes on - in silence, in shadows, and at great personal risk.