How crypto found a legal route into Nepal’s relief efforts

Cryptocurrency users around the world can now donate to Nepal’s Prime Minister’s Disaster Relief Fund without sending digital currencies into the country, thanks to a new financial channel that converts crypto into US dollars in the United States before transferring the money through the formal banking system

The arrangement has created a legal corridor for crypto-based relief donations at a time when Nepal bans the use and trading of cryptocurrencies.

“We have opened a facility to deposit digital currencies in Cross River Bank and bring the money into Nepal as dollars,” Wagle said. “I expect a substantial amount to come in through this facility in the coming days.”

The arrangement was developed after the devastating floods in the Bhotekoshi river prompted crypto companies, users and communities abroad to look for ways to contribute to relief efforts in Nepal.

A new portal, NepalRelief.org, accepts donations in widely used cryptocurrencies, including Ethereum, Polygon and Solana. By Monday, the portal had raised $174,831.

The initiative brings together blockchain network Polygon, US financial technology company Cross River Bank and Engage Nepal, an organisation led by former US ambassador to Nepal Scott DeLisi.

Polygon’s Open Money Stack and Coinme provide the technology to collect crypto donations, bridge the assets and convert them into USDC, a dollar-pegged stablecoin. Engage Nepal collects the funds in a publicly disclosed wallet and conducts an audit before Cross River Bank converts the assets into dollars within the US-regulated financial system.

The dollars are then transferred to Nepal’s official relief fund through the SWIFT banking network.

Because cryptocurrency is illegal in Nepal, the entire conversion process takes place outside the country, said Pravesh Rijal, executive vice-president at Cross River Bank. No cryptocurrency enters Nepal, and Nepali banks do not handle the digital assets.

“The entire process is settled in the United States, where the collected crypto is converted into dollars and sent to Nepal through the regulated banking system,” Rijal said.

The system emerged from discussions between Rijal and Sandeep Nailwal, founder of the Polygon Foundation, after Nailwal expressed interest in helping flood victims in Nepal.

The two spoke by phone on the morning of August 27 to find a way to channel crypto donations to Nepal without violating the country’s laws. They settled on converting the cryptocurrency into dollars in the United States and sending the proceeds through conventional banking channels.

Once Polygon, Cross River Bank and Engage Nepal had agreed to participate, the plan was discussed with the Nepal government through Finance Minister Wagle.

“Once the government gave its no-objection, a 25-member team at Cross River Bank completed the technical and legal preparations and set up the NepalRelief.org portal within 24 hours,” Rijal said.

The key to the arrangement is what the financial industry calls an “off-ramp”, the mechanism that converts cryptocurrency into conventional money. Cross River Bank and other US financial institutions, including Lead Bank, have the infrastructure to provide that service.

Without an off-ramp, donations collected in cryptocurrency remain crypto. The reverse process, converting conventional money into cryptocurrency, is known as an “on-ramp”.

Cross River Bank has publicly backed the initiative, expressing sympathy for flood survivors, families waiting for news of missing relatives and rescuers and volunteers working in areas cut off by damaged transport links.

“Nepal will rise again and rebuild,” the US-based company said in a LinkedIn post, urging people to donate through stablecoins to support relief and rescue operations. Its founder also said the organisation was ready to provide whatever assistance Nepal needed.

Nailwal said stablecoins were particularly suited to emergency relief because they could move money quickly.

“Stablecoins work best when money has to move fast to people who need it. While many others collected donations for Nepal in a more traditional sense, we built a path that leverages blockchain technology that lands as local currency in the government’s relief fund,” he wrote on X.

The international crypto industry has also provided relief through other channels since the Bhotekoshi floods.

Blockchain company Ripple announced on August 29 that it would provide $300,000 for the response. World Central Kitchen and Mercy Corps are using the money to distribute food, water, and emergency sanitation supplies in flood-hit areas.

The Solana Foundation and NFT marketplace Mallow also raised money by auctioning nine advertising slots on Solana’s official X account. The auction generated $166,946 in USDC, which Solana said it would send to the Nepal government’s relief fund through Engage Nepal.

Blockchain for Impact has separately pledged $100,000 for Nepal.

The crypto initiative marks an unusual departure for Nepal, where cryptocurrency remains prohibited despite the government’s pledge to regulate the sector.

The Rastriya Swatantra Party, which came to power campaigning on transparency and reform, had promised in its election manifesto to establish a regulatory framework for cryptocurrencies. During the current disaster, however, the government has allowed an arrangement that uses crypto abroad while keeping the digital assets entirely outside Nepal’s financial system.

Previous crypto-led relief campaigns for Nepal have run into legal barriers. This time, organisers have sidestepped those restrictions by using a US company to convert the digital assets into dollars before the money enters Nepal.

The model offers a possible blueprint for channelling cryptocurrency-based humanitarian aid into countries where digital currencies are banned: keep the crypto outside the country, convert it through a regulated financial institution, and send only conventional currency through the recipient country’s banking system.

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Source: asianews.network