February 9: Nepal Rastra Bank (NRB) has termed networking business illegal and has urged the general public to remain cautious about transactions involving cryptocurrency.

Issuing a public notice on Tuesday (February 8) amid increasing number of networking transactions and cryptocurrency, the central bank said such transactions are not only vulnerable to the country's economy but also for the investors.   

According to the central bank, virtual currency is issued by the private sector and is similar to ‘real money or fiat currency’ and can be used for electronic transaction. However, virtual currency lacks ‘legal tender status’ and ‘state backing’ and is considered as ‘speculative assets,’ NRB said in the notice.

Similarly, networking business, according to the NRB, is such business in which a company gives membership to its customers and encourages them to make new customers in order to sell products and services. Such business is also termed as multi-level marketing (MLM), NRB said.

MLA business involves pyramid scheme which has high chances of customers being duped, the central bank warned.

The central bank also urged one and all to remain cautious stating that the nature of cryptocurrency and networking marketing is not a subject to regulation.    

The NRB has mentioned that there remains high risk for investment in money laundering and terrorist activities from the transaction of cryptocurrency and networking marketing.    

Use of cryptocurrency could lead to illegal activities, especially forgery and tax evasion and the networking marketing is also illegal economic act leading to negative impact on revenue collection, the central bank stated.    

Similarly, the central bank said use of cryptocurrency could impact on the regulation of capital flight.    

The central bank added that increasing use of cryptocurrency could pose threat to fiscal stability. (With inputs from RSS)