As the world debates crypto regulations, Bhutan is quietly blending its tradition with technology. Not cash or card, the Himalayan kingdom is now rolling out a crypto welcome mat to woo tourists to the country, in one of its first nation-wide crypto use cases to attract capital inflow.
The country has collaborated with the world’s biggest crypto exchange Binance to enable Binance Pay for masses. It’s a UPI-like payments system that directly converts crypto to fiat currency or Bhutanese Ngultrum on a quick scan of the QR code of the merchant.
Over the last fortnight, Binance and the Bhutan government gave us a glimpse of this futuristic payments ecosystem, as we paid for everything – from hotels, tour guides, street food to handicrafts – using crypto. This was across Bhutan’s topography, whether we were in the capital city of Thimphu or at an elevation of over 3,100 meters in the foggy Dochula Pass or a mystical Takstang Monastery (Tiger’s Nest).
This marks a big technological shift in the economy of the so-called Land of the Thunder Dragon, which has been measuring its progress through happiness indices and sustainable practices for the longest time.
To be sure, unlike its bordering neighbours India and China that have remained wary of the decentralised digital asset class causing economic instability or driving fraudulent activities, Bhutan has been bullish on its purpose and promise.
Bhutan is one of the few countries globally where the government has been directly involved in mining Bitcoin. It is utilising its abundant hydroelectric capacity to mine crypto in a green way. Since 2020, the country has mined nearly 13,000 Bitcoin tokens worth $1.3 billion that accounts for about 40 percent of its Gross Domestic Product (GDP) – making it the fifth largest Bitcoin holder.
The Bhutanese government has never officially disclosed the locations of its crypto-mining facilities, but in May 2023, it had announced a plan to raise a $500-million green crypto fund to expand this network in partnership with Bitdeer Technologies.
While Binance Pay is Bhutan’s first national crypto tourism payment system, it’s interesting to note that crypto is not yet widely allowed in the country to be used as a replacement of currency to buy/ sell goods and services. Binance Pay only converts crypto amount into fiat before processing a transaction.
Damcho Rinzin, Director, Department of Tourism, Bhutan said, “We are looking at attracting 300,000 people (tourists) by end of next year… Binance is bringing digital payments, working with our digital-first DK Bank in Bhutan. There’s no need of paper or having a card, it’s very digital. This aligns very much with Bhutan's vision of tourism. Green, regenerative, and sustainable.”
“It’s also very significant in terms of the fees, because the other online payment modes have a larger amount of transaction fees, whereas Binance Pay allows no fee to maybe about 2 percent fees, and it's very instant,” Rinzin added.
Rinzin is hoping that this move will send a wider message to the world that Bhutan welcomes young, forward-looking, tech-savvy, community-driven travellers.
Richard Teng, CEO, Binance said, “The lifetime value of a crypto traveller is three times more than of a fiat traveller. An average crypto traveller’s transaction is more than $1,200 as compared to $400 of a fiat traveller. Crypto travel payments have also more than doubled between 2023 and 2024.”
Bhutan’s crypto ambitions
A strategic vision of its monarch, Jigme Khesar Namgyel Wangchuck, Bhutan is actively experimenting with making crypto payments adoption mainstream in the country.
At present, this is happening in a controlled environment, mainly through the guardrails and policies formed by the Gelephu Mindfulness City (GMC), a special administrative region (SAR) being developed in Bhutan to propel economic growth and employment.
Though Bhutan is positioning itself as a crypto friendly country, crypto trading is permitted only for entities and business partners registered with and following the GMC framework. On-ramping for crypto trading through domestic banks regulated under the Royal Monetary Authority (RMA) still remains restricted.
The country’s economy, which relies on hydropower resources, agriculture and tourism was hit during Covid-19. In the following years, there was an exodus of skilled talent and youth to find better opportunities and livelihood in other countries.
Around the same time, crypto became one of the promising ways out to build a better and modern economy for the country where mobile penetration is way over 95 percent.
Tourism currently drives, contributing to about 5 percent of the country’s gross domestic product (GDP), and the government is actively working towards increasing its share to 20 percent. Historically, Bhutan government has kept a stronghold on its tourism industry abiding to its philosophy of ‘high-value, low-volume’ tourism, that has also helped the country maintain its natural environment.
The government charges Sustainable Development Fee (SDF) of about $100 per day to all foreigners and around Rs 1200 a day from Indian travellers. These funds are used to build infrastructure, boost local economy, jobs, and preserve the country’s natural and cultural treasures.
“Bhutan is now the fifth largest holder of Bitcoin at the country level, which speaks volumes about its global ambition. So you can see vision, plus ambition, plus execution really bring about transformation and the embracement of innovation is extremely important in terms of economic development for the country's future,” Teng said.
Rinzin highlighted that enabling crypto tourism would also be a boon for the small and medium enterprises (SMEs) in Bhutan.
“This is a great opportunity for the SMEs in Bhutan. Tourism is one of the biggest access to this 40 million users (of Binance Pay) who are exactly what we want, to stay longer, they spend more, they're well-educated, they're well-travelled, and they come back,” Rinzin said.
Also read: Crypto regulations need clear vision and govt support, says Binance CEO Richard Teng
GMC drives regulatory future
When asked what tokens will be allowed to be used in the country, Hobeng Lim, Managing Director of Finance at Gelephu Mindfulness City (GMC) told Moneycontrol that GMC’s regulatory framework has certain criteria set for evaluating acceptable virtual assets.
“So there are norms and criteria like market cap, maturity, if one of the blockchains is on a transaction, can it be traced, can you do screening -- so there are many criteria for that as well, not just any token,” Lim said.
Lim shared that ultimately, the aim is to only build a blockchain-based ecosystem and not necessarily replace traditional banks. “There will always be some people who prefer traditional banks, cash or fiat payments.”
Tourism is just one of the use cases being explored under the GMC framework, as it looks to find other crypto partners for more use cases.
Lim said, “GMC is working on blockchain-based infrastructure products with partners such as Binance to create options for the people in GMC, for businesses to use, and just do things differently -- faster, better, more efficiently.”
“You're only constrained by your imagination. As a regulator, we feel we want to promote innovation in a safe way. I always tell people that those companies are not in the business of compliance,” he added.
Lim shared that GMC is a “firewalled” environment where the government is testing other crypto innovations and understanding the larger risks associated to it. If it works out well, only then it will be taken to the rest of the country.
Challenges ahead
Launched in May, Binance Pay got about 1,000 sign ups in Bhutan over the past month. It’s still at a very nascent stage of adoption given that the eastern Himalayan country is home to over 800,000 people.
Namgay Wangchuk, IT Assistant at The Pema in Thimphu shared that the staff at the high-end restaurant has taken it upon themselves to create awareness among its customers regarding this new option for crypto payments.
He shared that the hotel is seeing more foreign tourists and customers showing interest and curiosity to try the payments method than the local visitors at present.
While the Binance Pay QR code could be found at most stores and cafes, many of them actually used it for the first time when a group of travellers that included Moneycontrol visited it. At a country level, several places still don’t accept Visa and Mastercard payments either.
Meanwhile, though there was Wifi and internet in most locations, the connectivity was patchy at many places especially on higher altitudes.
Thinley Dorji, 33, who runs a handicrafts store, Yoesel in Paro said that people in Bhutan are actually quite keen on trying crypto. It’s even helping him attract more customers at his store.
“Binance Pay will help with international travel and bring more money to the country. But I think right now the adoption is more in Western Bhutan than rest of the country as more tourists come here,” Dorji said, adding that he too dabbles with crypto mining and trading every now and then.
“Crypto is still quite new and it is government led. Through projects like Binance, we hope to socialise this idea and expand the consciousness of people. It's still very new, so the average person on the street will not always go and trade, but slowly and surely we are enhancing the Binance business,” GMC’s Lim said.
(This reporter was in Bhutan at the invitation of Binance.)
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