Bhutan: Gelephu Special Administrative Region plans to recognize Bitcoin as a strategic reserve

On the homepage of Gelephu Mindfulness City (GMC), an innovative urban development project in southern Bhutan, it was announced today that the Bhutanese Special Administrative Region wants to recognize digital assets as part of its strategic reserves.

The region on the border with India could thus become one of the first jurisdictions in the world to officially include assets such as Bitcoin in its strategic reserves. The GMC will focus on digital assets with high market capitalization and liquidity to ensure easy trading.

In addition, the underlying blockchains of the assets should be mature, secure and transparent in order to be able to monitor transactions, according to the statement. Specifically, Bitcoin, Ethereum and BNB - the coin of crypto exchange Binance - are mentioned in the press release.

The enactment of this law, coupled with recognising digital assets such as BTC, ETH and BNB as part of GMC’s strategic reserves, is intended to bolster the growth of the digital asset ecosystem in GMC within a technologically progressive, yet well-regulated environment.
_{From the press release}

The small kingdom of Bhutan in South Asia has so far kept a rather low profile with regard to state crypto investments and Bitcoin mining activities. During the insolvency proceedings of the crypto companies Celsius and BlockFi, it became known that the state investment company Druk Holdings and Investments (DHI) has been operating its own Bitcoin mining facilities since a Bitcoin price of USD 5,000, primarily using the sufficient energy available from hydropower - Blocktrainer.de reported.

Since then, the kingdom has continuously expanded its state mining capacities. In 2020, the Bhutanese government also began purchasing Bitcoin for the strategic reserve, making the country the fifth largest state Bitcoin holder with currently 11,688 BTC - ahead of El Salvador.

On December 17, 2023, Bhutanese King Jigme Khesar Namgyel Wangchuck launched the sustainable urban development project Gelephu Mindfulness City (GMC). This project is supported by international partnerships, such as the architects and urban planners of the Bjarke Ingels Group (BIG).

The city is to extend over 1,000 square kilometers, which would make it approximately 2.5 percent of the Kingdom's land area and larger than Singapore. In line with the Bhutanese concept of Gross National Happiness, the region is to combine economic growth with mindfulness, holistic living and sustainability. The aim is to tackle unemployment and rural exodus and boost the region's economy across borders without neglecting Bhutanese culture. The city is intended to serve as a spiritual retreat and economic center and create a balance between human progress and nature.

GMC is based on various economic sectors, such as the promotion of cultural heritage, health and education, renewable energy and sustainable agricultural practices. An international airport will serve as a hub in the region and strengthen the economic importance of the Kingdom. One of GMC's priorities is to promote and support innovative technologies such as artificial intelligence and blockchain.

The special administrative region is said to already be involved in the area of blockchain and digital assets with its own Bitcoin mining facilities. There are also said to be plans to introduce the blockchain-based cryptocurrency TER to make financial transactions in the city more transparent and secure.

On December 26, 2024, a law was also passed that creates a legal and regulatory framework for companies that want to offer financial services in the digital assets sector in GMC. Strict KYC (Know Your Customer) guidelines and anti-corruption measures are prescribed.

The adoption of this law, in conjunction with the planned recognition of digital assets as part of the strategic reserves, is intended to promote the growth of the financial and digital ecosystem in a forward-looking, technologically advanced and regulated environment, make the city a regional blockchain center and strengthen its economic resilience.

Thus, the discussion about a strategic Bitcoin reserve and its importance for the economy has now reached the small kingdom of Bhutan. In March this year, GMC representatives plan to discuss with the Bhutanese government and international industry leaders the recognition of digital assets as part of the strategic reserve and the creation of a corresponding advisory body for the city project.