Nepal Finds a Legal Route for Crypto Donations Despite Its Crypto Ban
A new US-based system allows people around the world to donate cryptocurrency to Nepal’s disaster relief fund by converting digital assets into US dollars outside Nepal before sending the money through the formal banking system.
· 4 min read
KATHMANDU: Cryptocurrency users around the world can now contribute to Nepal’s flood relief efforts through a new system that allows digital assets to be converted into conventional money outside Nepal before the funds are sent to the government’s disaster relief fund.
The arrangement is significant because Nepal currently prohibits the use and trading of cryptocurrencies. Instead of bringing cryptocurrency into Nepal, the new system converts it into US dollars in the United States and transfers the money to Nepal through the regulated banking system.
A New Way to Donate Without Sending Crypto Into Nepal
The system was developed after the devastating Bhotekoshi floods created an urgent need for international relief support.
A new portal, NepalRelief.org, accepts donations in cryptocurrencies including Ethereum, Polygon and Solana. The crypto is converted into a dollar-pegged stablecoin and then into US dollars before being transferred to Nepal.
According to Finance Minister Swarnim Wagle, $500 in crypto-to-fiat donations had already reached the government's relief fund by Monday, while the NepalRelief.org portal had collected $174,831.
How the system works
Donors send cryptocurrency from anywhere in the world.
The digital assets remain outside Nepal.
The crypto is converted into USDC and then US dollars in the United States.
A regulated US financial institution processes the funds.
The money is transferred to Nepal through the SWIFT banking network.
Nepal receives conventional currency rather than cryptocurrency.
Why Crypto Does Not Enter Nepal
The main challenge was Nepal's ban on cryptocurrency.
Pravesh Rijal, executive vice-president at Cross River Bank, said the entire conversion process takes place in the United States. Nepali banks do not receive or handle the cryptocurrency itself.
This allows donors to use crypto while ensuring that only regular money enters Nepal's formal banking system.
The mechanism is known in the financial industry as an “off-ramp”—a process that converts cryptocurrency into traditional currency.
Who Built the System?
The initiative brings together several organisations, including:
Polygon, a blockchain network
Cross River Bank, a US financial technology and banking company
Engage Nepal, led by former US ambassador to Nepal Scott DeLisi
Coinme, which provides cryptocurrency infrastructure
Polygon's Open Money Stack and Coinme help collect and convert the digital assets. Engage Nepal holds the funds in a publicly disclosed wallet and conducts an audit before the money is converted into dollars.
Cross River Bank then transfers the dollars to Nepal's official relief fund.
The Idea Came Together Within Days
The system was developed following discussions between Cross River Bank executive Pravesh Rijal and Sandeep Nailwal, founder of the Polygon Foundation.
They spoke on August 27, after Nailwal expressed interest in helping people affected by the floods.
The challenge was finding a way to accept cryptocurrency without breaking Nepal's laws.
The solution was to keep the entire cryptocurrency transaction outside Nepal, convert the assets into dollars in the United States and send the resulting funds through traditional banking channels.
After discussions with Polygon, Cross River Bank and Engage Nepal, the proposal was presented to the Nepal government.
Following the government's no-objection, Cross River Bank's 25-member team reportedly completed the technical and legal preparations and launched the portal within 24 hours.
Crypto Industry Also Supporting Nepal
The new system is part of a wider international response from the cryptocurrency sector following the Bhotekoshi floods.
Several organisations have announced separate relief contributions:
Ripple announced $300,000 for the response, with World Central Kitchen and Mercy Corps using the funds for food, water and emergency sanitation.
The Solana Foundation and NFT marketplace Mallow raised $166,946 in USDC through an advertising-slot auction on Solana's official X account.
Blockchain for Impact pledged $100,000 for Nepal.
These efforts show how cryptocurrency networks can be used to move humanitarian funds across borders quickly, although the legal framework differs from country to country.
A Different Approach for a Country Where Crypto Is Banned
Nepal's government has previously faced legal challenges in dealing with cryptocurrency-based relief campaigns because digital currencies remain prohibited in the country.
The current arrangement takes a different approach.
Rather than changing Nepal's cryptocurrency rules for the relief effort, organisers have kept the digital assets abroad and converted them into regular currency before the money reaches Nepal.
This creates a financial corridor where cryptocurrency is used at the donation end, while Nepal's existing banking system handles the final transfer.
Could This Model Be Used Elsewhere?
The Nepal arrangement could provide a possible model for humanitarian donations in countries where cryptocurrency is restricted or prohibited.
The basic idea is straightforward:
Keep the cryptocurrency outside the country → convert it through a regulated financial institution → send conventional currency through the country's banking system.
For Nepal, the system provides another potential source of international relief funding while keeping cryptocurrency itself outside the country's financial system.
As the country continues dealing with the impact of the Bhotekoshi floods, the experiment could also fuel a wider discussion about how Nepal should approach cryptocurrency regulation in the future.
Published 3 days ago in Business