Bhutan focusing on cryptocurrencies to boost tourism (and pay government salaries)

The small Himalayan kingdom is focusing on virtual currencies to modernise its economy and attract digital nomads. The government is generating its reserves (the sixth largest in the world) with hydroelectric power, an abundant and sustainable resource in the country. However, challenges remain, related to digital market volatility, the need for training, and fraud.

Thimphu (AsiaNews) – Bhutan is considering attracting new tourists with its own cryptocurrency, produced by its abundant hydroelectric power, and use it to fund public sector salaries.

The small Himalayan kingdom nestled between India and China raised public sector salaries by 50 per cent in 2023 to prevent the flight of qualified people, a step that effectively curbed job losses in the following months, to just over 500, from nearly 1,900 in the same period the previous year.

Bhutan's digital revolution does not stop there. In May, the country introduced a national system to pay for tourism services via cryptocurrency: from visas and flights to hotels and monastery entrance fees.

The system is supported by Binance Pay and Bhutan’s fully digital DK Bank, with more than a thousand merchants already involved.

In Bhutan, the system is simple, secure, and stable: payments are made in cryptocurrency, and merchants receive immediate settlements in the local currency, ngultrum.

The initiative is part of a strategy to revive tourism, a key sector for Bhutan's economy, based on a “high-value, low-volume” ethos.

After tourism declined during the COVID-19 pandemic, the government halved the daily tourist tax to US$ 100 until 2027, aiming to double arrivals by 2026 and increase their contribution to the economy by 5-20 per cent. Last year, 145,065 people visited the country.

The authorities now hope to attract digital nomads as well. According to a study by Binance and Travala, those who pay in cryptocurrencies tend to spend twice as much as other tourists and stay longer. However, the project also requires more training.

“We’re a small nation becoming a smart nation,” said Rinzin Lhamo, general manager of Zhiwaling Heritage Hotel in Paro, speaking to the South China Morning Post. “But we still need more training from the government to fully understand the application of cryptocurrency and cryptocurrency payment.”

Bhutan began mining bitcoin in 2018 thanks to its large availability of clean, cheap, and abundant hydroelectric power.

According to Arkham Intelligence, a data-sharing platform, the country currently holds approximately US$ 1.28 billion in bitcoin holdings, the sixth government-held bitcoin reserves.

This model could inspire other countries with access to low-cost energy production.

Implementing the project faces some obstacles linked to the volatility of cryptocurrencies, while some experts also fear scams and the circulation of untrustworthy tokens.

For this reason, the Gelephu Mindfulness City, a mega infrastructure project under construction near the Indian border, will serve as a laboratory, where only trustworthy digital currencies will be allowed.

“The way we regulate is from a very practical perspective,” said Hobeng Lim, managing director of financial services at the GMC Authority. “We identify the risk and then impose controls.”

• bhutan
• himalaya
• cryptocurrency
• hydroelectric power
• bitcoin
• tourism
• public sector salaries