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Bhutan

Retail_Trading_Status

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Analysis ID
#220
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Archived
Created
2025-04-13 07:59
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Live

Executive Summary

Retail cryptocurrency trading in Bhutan exists in a regulatory 'Gray-Zone'. The Royal Monetary Authority (RMA) has warned against cryptocurrency use and restricts fiat-to-crypto on-ramping via the banking system. While state-level Bitcoin mining exists, retail trading faces hurdles, although the Gelephu Mindfulness City (GMC) may develop a separate regulatory environment. Bhutan is also piloting a CBDC, the Digital Ngultrum.

Key Pillars

  • Primary Regulator: The Royal Monetary Authority (RMA) oversees financial matters and has issued warnings against cryptocurrency use.
  • Compliance: The Regulatory Sandbox Framework for Mining Cryptocurrency includes provisions for KYC and consumer protection.
  • Licensing/Registration: There are no specific licensing requirements for retail cryptocurrency trading, but mining operations within the regulatory sandbox and entities within the Gelephu Mindfulness City (GMC) require registration.

Landmark Laws

  • Regulatory Sandbox Framework for Mining Cryptocurrency (January 2019): Regulates mining operations and prohibits ICOs without RMA approval, restricting buying/selling/trading of cryptocurrency or facilitating exchange services inside the country.
  • Application of Laws Act 2024 (for GMC): Reportedly legitimizes financial services involving digital assets and recognizes VASPs within the Gelephu Mindfulness City (GMC).

Considerations

  • Cryptocurrencies are not considered legal tender in Bhutan.
  • The Royal Monetary Authority (RMA) has warned against undertaking cryptocurrency transactions, stating they are carried out at the risk of those involved.
  • The Bhutanese banking system is restricted from facilitating fiat-to-crypto on-ramping, except possibly within the Gelephu Mindfulness City (GMC) for registered entities.
  • Regulatory uncertainty poses potential legal risks for those involved in cryptocurrency-related activities.
  • The government is focused on leveraging hydropower for mining as a national revenue source and strategic reserve, rather than promoting widespread retail participation.

Notes

  • Bhutan has been involved in Bitcoin mining since around 2019-2020 through its sovereign wealth fund, Druk Holding and Investments (DHI).
  • Bhutan is piloting a Central Bank Digital Currency (CBDC), the "Digital Ngultrum," in partnership with Ripple.
  • The Gelephu Mindfulness City (GMC) is aiming to create a distinct regulatory environment for cryptomining and exchanges.
  • As of 2025-01-17, Binance does not appear to be operational in Bhutan.
  • The Royal Monetary Authority (RMA) website is https://www.rma.org.bt/

Detailed Explanation

The status of retail cryptocurrency trading in Bhutan is in a 'Gray-Zone.' While individuals are not explicitly banned from holding cryptocurrencies, active trading and use for payments face challenges due to the absence of a clear regulatory framework for the public. The Royal Monetary Authority (RMA), the central bank, does not recognize cryptocurrencies as legal tender, warning against their use as early as 2014 and reiterating that any cryptocurrency transactions are undertaken at the individual's own risk. A significant limitation is the RMA's policy preventing the use of the Bhutanese banking system for converting fiat currency (Ngultrum) into cryptocurrency for trading, except potentially within the Gelephu Mindfulness City (GMC) project for registered entities. This restricts the ability of average citizens to legally purchase cryptocurrencies through regulated channels.

Bhutan, through Druk Holding and Investments (DHI), has been involved in Bitcoin mining since around 2019-2020 and holds substantial reserves, focusing on hydropower for mining as a revenue source. In January 2019, the RMA introduced a "Regulatory Sandbox Framework for Mining Cryptocurrency," which includes provisions for KYC, consumer protection, and RMA approval, primarily focusing on regulating mining operations rather than retail trading exchanges. The framework prohibits participants from floating Initial Coin Offerings (ICOs) without RMA approval and restricts engaging in or promoting the buying/selling/trading of cryptocurrency inside the country or facilitating exchange services.

Recent developments indicate that the GMC special administrative region aims to create a distinct regulatory environment. A policy statement mentioned confining cryptomining and exchanges to GMC-registered entities under a specific GMC regulatory framework. The "Application of Laws Act 2024" for GMC reportedly legitimizes financial services involving digital assets and recognizes VASPs within that zone. This suggests a potential future pathway for regulated activity limited to the GMC zone and aimed at businesses. Bhutan is also piloting a Central Bank Digital Currency (CBDC), the "Digital Ngultrum," in partnership with Ripple, to improve financial inclusion and payment efficiency, but this is separate from regulating decentralized cryptocurrencies. The World Bank reported on 2024-10-02 that the RMA requires all cryptomining and exchanges to be confined to GMC registered entities and business partners and regulated under the GMC regulatory framework.

In summary, individuals might hold crypto obtained through means not involving the Bhutanese banking system, but facilitated trading and purchasing face significant barriers due to banking restrictions and the lack of a supportive regulatory framework outside of potential future developments in the GMC special zone. Regulatory uncertainty remains, with the RMA's warnings and the focus on state-level mining and a CBDC contributing to the gray-zone status for retail investors. Binance does not appear to be operational in Bhutan according to a 2025-01-17 report. The RMA has not endorsed cryptocurrency as a legal tender as of 2023-05-13.

Summary Points

Retail Cryptocurrency Trading Status in Bhutan: Regulatory Analysis

I. Overall Regulatory Status:

  • Gray Zone: Retail cryptocurrency trading (buying, selling, holding) exists in a regulatory gray zone.
    • No explicit ban on holding cryptocurrencies.
    • Active trading and use for payments face significant hurdles.
    • Lack of clear regulatory framework for the general public.

II. Key Regulatory Bodies and Their Roles:

  • Royal Monetary Authority (RMA):
    • Bhutan's central bank and primary regulatory authority.
    • Has stated cryptocurrencies are not legal tender.
    • Issues warnings against cryptocurrency use, stating transactions are at individual's own risk.
    • Introduced a "Regulatory Sandbox Framework for Mining Cryptocurrency" (focused on mining, not retail trading).
    • Actively piloting a Central Bank Digital Currency (CBDC), the "Digital Ngultrum."
  • Druk Holding and Investments (DHI):
    • Bhutan's sovereign wealth fund.
    • Engaged in Bitcoin mining since 2019-2020.
    • Focuses on leveraging hydropower for mining as a national revenue source.
  • Gelephu Mindfulness City (GMC) Authority:
    • Governing body of the GMC special administrative region.
    • Aims to create a distinct regulatory environment for digital assets within GMC.

III. Important Legislation and Regulations:

  • RMA's Regulatory Sandbox Framework for Mining Cryptocurrency (2019):
    • Focuses on regulating cryptocurrency mining operations.
    • Includes provisions for KYC, consumer protection, and RMA approval.
    • Prohibits participants from floating Initial Coin Offerings (ICOs) without RMA approval.
    • Restricts engaging in or promoting the buying/selling/trading of cryptocurrency inside the country or facilitating exchange services.
  • GMC's "Application of Laws Act 2024":
    • Recognizes Virtual Asset Service Providers (VASPs) and digital assets within the GMC.
    • Legitimizes financial services involving digital assets within the GMC zone.

IV. Requirements for Compliance:

  • General:
    • No clear compliance requirements for retail trading outside of the GMC.
    • Individuals are responsible for any risks associated with cryptocurrency transactions.
  • Mining Operations (under RMA Sandbox):
    • KYC requirements.
    • Consumer protection measures.
    • RMA approval required.
  • GMC-Registered Entities:
    • Must comply with the specific GMC regulatory framework for digital assets.

V. Notable Restrictions or Limitations:

  • Banking System Restrictions:
    • RMA policy prevents the use of the Bhutanese banking system for "on-ramping" (converting fiat currency into cryptocurrency).
    • This restriction applies throughout Bhutan, except potentially within the GMC.
  • Lack of Legal Tender Status:
    • Cryptocurrencies are not legal tender in Bhutan.
  • Geographic Limitations:
    • Potential regulatory developments are primarily focused on the Gelephu Mindfulness City (GMC) special zone.
  • Restrictions on ICOs and Exchanges:
    • The RMA's sandbox framework prohibits ICOs and restricts cryptocurrency exchanges outside of the GMC.

VI. Recent Developments or Changes:

  • Gelephu Mindfulness City (GMC) Developments:
    • The GMC aims to create a distinct regulatory environment for digital assets.
    • The "Application of Laws Act 2024" recognizes VASPs and digital assets within the GMC.
    • Cryptomining and exchanges are to be confined to GMC-registered entities.
  • CBDC Pilot:
    • Bhutan is actively piloting a Central Bank Digital Currency (CBDC), the "Digital Ngultrum," in partnership with Ripple.
  • Continued Warnings from RMA:
    • The RMA continues to advise against cryptocurrency use, emphasizing the risks involved.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Bhutan

Topic: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued)

1. Current Status: Gray-Zone

2. Detailed Narrative Explanation:

The status of retail cryptocurrency trading (buying, selling, holding) for individual citizens and residents in Bhutan is best described as a Gray-Zone. While there isn't an explicit, outright ban on individuals holding cryptocurrencies, active trading and using them for payments face significant hurdles and lack a clear regulatory framework for the general public.

  • Lack of Legal Tender Status and Official Warnings: The Royal Monetary Authority (RMA), Bhutan's central bank, has explicitly stated that cryptocurrencies are not legal tender. As early as 2014, the RMA warned against their use, and subsequent statements reiterate that any transactions involving cryptocurrencies are undertaken at the individual's own risk.
  • Restrictions on Banking System: A key practical limitation is the RMA's policy preventing the use of the Bhutanese banking system for "on-ramping" – converting fiat currency (like the Bhutanese Ngultrum) into cryptocurrency for trading purposes. This restriction applies throughout Bhutan, except potentially within the specially regulated Gelephu Mindfulness City (GMC) project for registered entities. This makes it very difficult for average citizens to legally purchase cryptocurrencies through regulated channels.
  • State-Level Involvement vs. Retail Access: Bhutan, through its sovereign wealth fund Druk Holding and Investments (DHI), has engaged significantly in Bitcoin mining since around 2019-2020 and holds substantial reserves. This state-level activity, however, does not automatically translate into permission or facilitation for retail trading. The government's strategy appears focused on leveraging hydropower for mining as a national revenue source and strategic reserve, rather than promoting widespread retail participation.
  • Regulatory Sandbox for Mining: In January 2019, the RMA introduced a "Regulatory Sandbox Framework for Mining Cryptocurrency". While this framework includes provisions for KYC, consumer protection, and RMA approval, its primary focus appears to be on regulating mining operations, not retail trading exchanges or individual investment activities. Furthermore, the framework explicitly prohibits participants from floating Initial Coin Offerings (ICOs) without RMA approval and restricts engaging in or promoting the buying/selling/trading of cryptocurrency inside the country or facilitating exchange services.
  • Gelephu Mindfulness City (GMC) Exception: Recent developments indicate that the GMC special administrative region aims to create a distinct regulatory environment. A policy statement mentioned confining cryptomining and exchanges to GMC-registered entities under a specific GMC regulatory framework. The "Application of Laws Act 2024" for GMC reportedly legitimizes financial services involving digital assets and recognizes VASPs within that zone. This suggests a potential future pathway for regulated activity, but it is geographically limited and likely aimed at businesses and specific partners, not the general retail population across Bhutan.
  • CBDC Pilot: Bhutan is actively piloting a Central Bank Digital Currency (CBDC), the "Digital Ngultrum," in partnership with Ripple. This project aims to improve financial inclusion and payment efficiency but is distinct from regulating decentralized cryptocurrencies like Bitcoin for retail trading.

In summary, while individuals might technically hold crypto obtained through means not involving the Bhutanese banking system (e.g., mining certain altcoins like Pi, receiving transfers), active, facilitated trading and purchasing face significant barriers due to banking restrictions and the lack of a supportive regulatory framework outside potential future developments in the GMC special zone. The RMA's warnings and the focus on state-level mining and a CBDC further contribute to the gray-zone status for retail investors.

3. Supporting Excerpts from Sources:

  • (2024-10-02) CCI: "Is crypto legal in Bhutan? No. Cryptocurrencies are not considered legal tender, and the authorities advise against undertaking any transactions using cryptocurrencies, warning that these are carried out at the risk of those involved."
  • (World Bank): "...the Recipient, through its central bank, the Royal Monetary Authority, has i) published a policy statement requiring that all cryptomining and exchanges be confined to the Gelephu Mindfulness City (GMC) registered entities and business partners and regulated under the GMC regulatory framework, and that the current practice of not allowing on-ramping for cryptocurrency trading through the banking system will continue for the rest of Bhutan..."
  • (2023-05-13) The Bhutanese: "Although the Royal Monetary Authority (RMA) does not recognize or endorse cryptocurrency as a substitute/surrogate to legal tender/currency, there is a regulatory sandbox framework for mining cryptocurrency."
  • (2023-05-13) The Bhutanese (quoting the sandbox framework): Conditions include "...not engaging and or promoting buying or selling and trading of cryptocurrency inside the country, nor facilitating cryptocurrency services, such as exchanges or intermediaries."
  • (2025-01-17) OneSafe Blog: "Regulatory Uncertainty: Bhutan's regulatory stance on cryptocurrency remains unclear, posing potential legal risks... Based on the available information, Binance does not appear to be operational in Bhutan."
  • (2025-01-21) CoinGeek: "Additionally, last month, the city [GMC] enacted the 'Application of Laws Act 2024', which recognized virtual asset service providers (VASPs) and digital assets in GMC."

4. Source URLs:

Web Sources (10)

Sources discovered via web search grounding

Search queries used (5)
  • Royal Monetary Authority of Bhutan cryptocurrency policy retail
  • Is cryptocurrency trading legal for citizens in Bhutan?
  • Bhutan crypto regulation individuals
  • Bhutan digital asset laws retail investors
  • Bhutan central bank statement cryptocurrency
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