Digital Currency in Nepal: Efforts Toward Legal Recognition and When Usage May Begin
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The government is moving forward with granting legal recognition to ‘digital currency’ as a form of banknotes, which officials at Nepal Rastra Bank say will encourage the use of such currency for pilot testing.
This week, the government released a draft bill regarding amendments and consolidation of foreign exchange laws, which includes ‘digital currency’ in the definition of currency.
The Nepal Rastra Bank’s third amendment bill, introduced after the formation of the new government to the House of Representatives, specifies that ‘currency’ refers not only to cash banknotes but also to coins and ‘digital currency’ issued by the bank.
A spokesperson for the central bank stated that the process to implement the central bank digital currency (CBDC) pilot project has begun, and legal recognition is necessary, prompting steps forward.
What does the government say?
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Officials at the central bank have been studying the potential of digital currency for several years.
The new government has included the proposal to legally recognize digital currency in the amendments related to Nepal Rastra Bank and foreign exchange regulations.
Amrit Lamsal, spokesperson and joint secretary of the Ministry of Finance, stated that once Parliament passes the Nepal Rastra Bank related laws, clarity regarding digital currency usage will emerge.
He said, “During the amendment of the act, Parliament and the relevant committee will provide clarity on which types of digital currencies will be recognized. Based on the mandate from the act, Nepal Rastra Bank will formulate the procedures, making the matter clearer.”
Nepal has pursued a policy not to recognize virtual or cryptocurrencies issued by the private sector.
Legislation concerning digital currency provisions must be approved by both houses of Parliament.
While cryptocurrencies are issued by the private sector, the authorization to issue CBDC is vested in Nepal Rastra Bank, granting it legal protection.
What does Nepal Rastra Bank say?
Nepal Rastra Bank spokesperson Guruprasad Paudel said groundwork is underway to implement digital currency and the process to grant it legal status is advancing.
“We have established a department within the Payment Systems Division to study central bank digital currency and plan to initiate wholesale pilot testing by the end of 2026 if feasible. Considering this, laws must recognize central bank digital currency. Thus, amendments to various laws are in progress.”
According to a progress report, the central bank intends to implement electronic currency in five phases.
Nepal Rastra Bank is actively preparing the framework, identifying potential applications for digital currency issued by the bank in retail, wholesale, and cross-border payments.
Paudel explained, “Central bank digital currency refers to currency issued by the central bank that remains under banking system control and receives legal status. This practice is global. Our neighboring countries India and China are also conducting pilot projects. We too must pursue this path with legal amendments.”
He mentioned that the first stage will involve testing a wholesale system, and infrastructure and technology trials are ongoing to bring it to general consumers.
“Our plan is to first introduce wholesale and then retail central bank digital currency. Wholesale CBDC covers transactions between the central bank and banks or financial institutions, while retail CBDC reaches consumers, similar to mobile banking models.”
Which countries have central bank digital currencies?
Following the example of India, which uses the Aadhaar identification system, Nepal could potentially use a national ID card with biometric data, and retail CBDC implementation is expected to enhance financial inclusion.
Officials note that digital currency can strengthen monetary sovereignty and reduce expenses associated with printing banknotes.
The Atlantic Council, based in Washington D.C., tracks worldwide data on virtual currencies issued by central banks.
According to the Atlantic Council, among 146 countries, 3 have fully implemented digital currency, and 31 are conducting limited pilot programs.
The Bahamas, Nigeria, and Jamaica are the countries with fully operational digital currencies.
India has launched wholesale and retail ‘digital rupee’ pilot programs with over 6.5 million users and 17 banks offering CBDC services as of March 2025.
China began testing the e-CNY in 2019 and by the end of 2025 had approved 340 million transactions, also utilizing it in public sector payments, tourism, and cross-border retail payments.
The Atlantic Council notes that 33 countries, including Pakistan and Sri Lanka, are developing CBDC, while Nepal remains in the research phase.
Officially, the Nepalese YouTube channel is also available. To watch easily accessible videos and subscribe, click here. You can also follow content on Facebook, Instagram, and Twitter. Additionally, Nepalese service programs air on radio from Monday to Friday at 8:45 PM.