Digital currency to be recognised under Nepal Rastra Bank Act amendment; private crypto, virtual currencies excluded

KATHMANDU: A proposed amendment to Nepal Rastra Bank Act, 2058 (2002) would add digital currency to the legal definition of currency while explicitly excluding privately issued cryptocurrencies and virtual currencies from being treated as legal tender.

The Finance Committee of the House of Representatives (HoR) held clause-by-clause deliberations on the amendment on Monday, during which lawmakers and officials discussed the legal scope of digital currency. Nepal Rastra Bank (NRB) Executive Director Dirgha Bahadur Rawal said the provision would cover a Central Bank Digital Currency (CBDC).

NRB Executive Director Rawal said it was unnecessary to include privately issued cryptocurrencies and virtual currencies in the Act, noting that issues related to those instruments have already been addressed under anti-money‑laundering laws.

At the 19th meeting of the Finance Committee, Finance Secretary Dr Ghanshyam Upadhyaya said that digital currency and the digital banking system need not be defined as the same subject, adding that the form and operational system of digital currency fall within their own framework. He proposed wording that would refer to 'digital currency specified by NRB' for clarity, and said that currency is primarily a central bank matter: digital currency, he said, means currency issued or specified by the central bank.

Under the amendment proposal, Clause I of subsection 4 of Section 2 would expand the definition of 'currency' to include banknotes, coins and digital currency issued by the central bank. The current Act defines currency only as banknotes and coins.

An earlier suggestion from the amendment proposer would explicitly define 'CBDC' as legal tender in digital form issued by the cental bank and would state that the term also includes digital banking systems. The proposer also recommended language making clear that digital currency issued by the bank shall mean a central bank digital currency issued, controlled and settled by Nepal Rastra Bank, and that privately issued virtual currency or cryptocurrency shall not be considered currency or legal tender for the purposes of the Act.

(With inputs from RSS)