Digital Currency Recognized in Nepal Rastra Bank Act Amendment; Crypto and Virtual Currencies Excluded

Kathmandu / Aug. 3: A proposed amendment to the Nepal Rastra Bank Act, 2002 (2058 BS) seeks to recognize digital currency as legal tender while explicitly stating that privately issued cryptocurrencies and virtual currencies will not be considered currency or legal tender.

The issue was discussed during clause-by-clause deliberations on the bill to amend the Nepal Rastra Bank Act, 2002 at a meeting of the House of Representatives’ Finance Committee on Monday, where members debated the definition and legal scope of digital currency.

Speaking at the meeting, Nepal Rastra Bank Executive Director Dirgha Rawal said that the proposed provision on digital currency is intended to cover a Central Bank Digital Currency (CBDC).

He clarified that there is no need to incorporate cryptocurrencies and virtual currencies into the Nepal Rastra Bank Act, noting that issues related to such assets have already been addressed under Nepal’s anti-money laundering legislation.

Finance Secretary Dr. Ghanshyam Upadhyaya said there is no need to define digital currency and digital banking systems as the same concept. He explained that the nature and operation of digital currency fall within its own framework, making a separate definition for a digital currency system unnecessary.

Dr. Upadhyaya suggested that, for greater clarity, the bill could specify “digital currency designated by Nepal Rastra Bank.” Since currency is fundamentally a matter under the jurisdiction of the central bank, he said the term digital currency should refer to digital money issued or designated by the central bank.

Under the proposed amendment, Clause (j) of Sub-section (4) of Section 2 would define “currency” as banknotes in circulation as cash, with the term also encompassing coins and digital currency issued by the bank. The existing Act currently defines currency only as banknotes and coins.

Earlier, amendment proponents had proposed defining a Central Bank Digital Currency (CBDC) as digital legal tender issued by the central bank, with the term also covering digital banking systems.

The amendment further proposed that digital currency issued by the bank should mean a Central Bank Digital Currency (CBDC) issued, regulated, and settled by Nepal Rastra Bank, while privately issued virtual currencies or cryptocurrencies would not be recognized as currency or legal tender under the Act. RSS