Crypto trading; Lethargy or ineptitude of the Nepalese bureaucracy?
The confusion seen in the Central Bank and Finance ministry of Nepal has become a laughing stock. Just after a few months of the Finance Minister stating that he would opt for regulation of the cryptocurrency trading, the Central Bank has made a U-turn and gone on an offensive against small time crypto traders. The Central Bank seems to be paranoid about foreign reserve flight from Nepal through means like ‘Hundi’ and cryptocurrencies. Why the Central Bank, finance ministry and Nepal government are completely silent about the Panama Papers that named Nepalese Tycoons like Binod Chaudhary of having offshore accounts in Tax haven nations like Panama, Cayman islands, however, is anybody’s guess. It seems that appointing a controversial business tycoon as a lawmaker with clear conflict of interest is normal.
Regulatory mechanisms are essential to monitor and curb money laundering and terror financing activities. However, Nepal is a different story al-together. While giving free pass to corrupt politicians and businessmen, Nepal continues to rely heavily on remittance from exploited laborers. While the politicians regurgigate the rhetoric that it wants to create employment opportunities for its citizens to avoid poor Nepalese being exploited in Arab nations, as the primary source of foreign reserve, hypocritically, official policy yearns for more Nepalese to leave this country. Central bank and finance ministry relies on exploited Nepalese labor abroad to compensate for its huge trade deficit. Not satisfied with this sorry state of affairs, now they have decided to dictate how Nepalese abroad spend and/or invest their money.
Rather comically, the Central Bank announced that even Nepalese living abroad are not allowed to trade in cryptocurrencies, even if it is totally legal in the country they reside in. Unlike the idiotic politicians and beureaucrats of Nepal, foreign countries like India and Russia have started to incorporate crypto trading into their economy. It is dumb that Nepal expects its citizens to remit dollars earned from their own sweat and blood, but will not allow them to use their brains to earn.
There is a tendency in Nepal to put a blanket ban on things it doesn’t understand. It shows how outdated Nepal’s technocracy is. While the argument against crypto trading is to avoid Foreign reserve flight from Nepal, it is puzzling how our ‘experts’ do not understand that sans regulation, Nepal is in fact losing foreign reserve . Unlike Nepal, India took time to study cryptos meaning crypto exchanges like Binance, and foreign exchange brokers like Octafx, Exness were able to trade in India’s national currency and banking system. Additionally, by legalizing crypto trading recently with a fixed 30 percent Capital Gains tax, India has added one more method of revenue generation. Levying a simple TDS( Tax deducted at source) tax, India will also be able to keep track of each and every transaction that occurs within India, making tax evasion and money laundering obsolete.
Since crypto trading is unregulated, it has increasingly become a favorite for money launders, and that is, in fact, alarming. However, Nepal needs to take the pros of allowing crypto trading into cognizance as well in order to form a tight trading policy. What the technocrats have failed to understand is that crypto trading and Forex can also be one of the means to generate foreign reserves. Unlike the Nepalese stock market that is easily manipulated by the ‘whales’( colloquially called ‘kheladi’), the trillion dollar Forex and crypto market is difficult to manipulate. Ergo, a sound technical trader can actually earn and generate foreign currency for Nepal. To be complicit in market manipulation of our fledgling Nepse while going after small time traders for trading in markets where their knowledge can actually generate substantial revenue for themselves and for the nation is dumb to say the least. Real Estate, offshore tax havens are used to ‘whitewash’ black money in a more substantial number, yet they are legal in Nepal. This argument is not being made to criminalize Real Estate market, rather to stress that by and in itself, crypto trading is similar to Real estate. Both are speculative transactions dependent on real world economic, national, international and socio-political factors.
It is time the rotting vestiges prevalent in our financial system be wiped out, as they have clearly failed to update themselves with the rapidly evolving financial market. The tragedy is that their ineptitude and idiocrasy has kept Nepal from stepping into the 21st century. It seems they want us to go back to the barter days, since they do not seem to understand the nature of speculative financial market. The same rot has kept our home grown stock exchanges from taking off with finance minister and central bank often making haphazard statements about the stock market. Like with any other markets, crypto and Forex market has its pros and cons. Therefore, a proper task force should be made to study the pros and cons, and make effective regulations. Putting a blanket ban on free market shows that Nepalese politicians still have not given up on their communist dreams.
Nepal government, central bank and finance ministry has no idea about what cryptocurrency is. So, it seems they have taken to heart a popular Nepalese saying ‘Najane tirtha ko bato nasodhnu’. However, we at BrandGuff feel a vigorous discussion and awareness is much needed on this. For more on what the blockchain and crypto are; the pros and cons to Nepal, Click here!
