Bhutan, the third-largest Bitcoin sovereign holder: Cryptocurrency tax and regulatory system at a glance

TechFlame

2025-09-14 15:00

TechFlame2025-09-14 15:00

English

The country has held a total of 1,2062 bitcoins since 2020, making it the third-largest Bitcoin sovereign holder in the world.

Author: Gao Xian, FinTax

1 Introduction

In recent years, Bhutan has relied on its hydroelectric energy location advantages and a strategic development model driven by the national machinery to continue to build Bitcoin mines, setting off a “green mining revolution”. According to data released by Arkham Intel on June 27, 2025, the country has held a total of 1,2062 bitcoins since 2020, making it the third-largest Bitcoin sovereign holder in the world. This reserve represents approximately 40% of Bhutan's gross domestic product (GDP), making it one of the countries with the largest exposure to cryptocurrency assets in the world. In July 2025, Bhutan launched a nationwide crypto payment system that allows visitors to use cryptocurrency to pay for visa fees, flights, and local goods, making it one of the first countries to use crypto payments throughout the travel ecosystem. Binance CEO Ricahrd Tang sent a letter to Bhutan saying that Bhutan has pioneered a path of cryptocurrency innovation to pave the country's vision with trust. However, in stark contrast to the rapidly booming cryptocurrency industry in Bhutan is

the country's slightly rough, nascent cryptocurrency taxation and regulation system.

2 Bhutan

's qualitative and basic tax policy on cryptocurrencies

2.1 The characterization of cryptocurrencies

Bhutan is more cautious about cryptocurrencies, not using them as legal tender, but as assets subject to regulatory restrictions. However, this does not prevent Bhutan from becoming increasingly open to crypto assets. In particular, in January 2025, Gelephu Mindfulness City (GMC), a special administrative region of Bhutan, announced plans to include Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) in its strategic reserve framework (regional level). This is a pioneering experiment, and the law and implementation rules are still in progress. This means that Bhutan's characterization of cryptocurrencies has surpassed ordinary commodities or assets and raised them to the level of national strategic reserve assets

2.2 Basic tax policies and their international comparison

2.2.1 Overview of the Bhutan Tax System

The modernization process of Bhutan's tax system began relatively late. The government gradually introduced monetized taxation in the 1960s. The 2001 Kingdom Income Tax Law established a modern comprehensive income tax system covering personal and corporate taxes, and the 2000 Sales Tax, Customs, and Consumption Tax Act regulated the collection of indirect taxes. Currently, Bhutan's tax system mainly includes personal income tax, corporate income tax, sales tax, and customs and consumption tax, and recently passed new laws including the Income Tax Bill of Bhutan 2025 (Income Tax Bill of Bhutan 2025, hereinafter referred to as the “Income Tax Law”) and the Goods and Services Tax Bill of Bhutan 2025 (Goods and Services Tax Bill of Bhutan 2025, hereinafter referred to as the “Goods and Services Tax Law”) to further modernize the tax system. Currently, sales tax, customs and consumption tax are implemented in accordance with the Sales Tax, Customs and Consumption Tax Act of 2000, and the specific tax rate is announced by the Ministry of Finance (of which sales tax is currently 7%). Bhutan plans to implement a 5% Goods and Services Tax (GST) from January 2026 to replace the existing sales tax. Since the new law will come into effect on January 1, 2026, this article

will focus on the new law.

2.2.2 Personal income tax

Personal income tax in Bhutan is based on an excess progressive tax rate, increasing from 0% to 30%, and applies to citizens, residents, and other individuals with an income of more than 300,000 in Bhutan. The Income Tax Act 2025 consolidated the original personal income tax (PIT) and commercial income tax (BIT) under personal income tax to simplify the tax structure. According to the new law, the specific individual income tax levels are as follows:

2.2.3 Corporate income tax

Corporate income tax in Bhutan applies to companies, groups, and significant economic presence (Significant Economic Presence). Under the new Income Tax Act, the tax rate is 22%, a reduction from the previous 30%, to attract investment and

support business development.

2.2.4 Sales tax and upcoming goods and services tax (GST

)

Currently, the sales tax rate in Bhutan is 7% and applies to most goods and services. However, Bhutan plans to implement a 5% Goods and Services Tax (GST) in 2026 to replace the existing sales tax, thereby unifying the tax system, simplifying tax compliance, and aligning it with

international standards.

2.3 Cryptocurrency Tax Policies and Recent Developments

Bhutan has no specific tax provisions specific to Bitcoin or other cryptocurrencies. Although the country is involved in cryptocurrency mining and supports digital infrastructure, it does not consider cryptocurrencies as legal tender and does not provide specific tax breaks. In the framework of Bhutan's current tax legislation, when potential taxable events related to cryptocurrencies occur — such as generating revenue from cryptocurrency mining, investment, or trading (sale or exchange), or accepting cryptocurrency as payment for goods or

services, or even simply holding digital assets — may result in the application of current taxes.

When the 2024 Income Tax Law was revised, mainstream media in Bhutan reported that according to relevant officials from the competent department, the Department of Revenue and Customs (Department of Revenue and Customs), this revision of the Income Tax Law will consider digital assets such as cryptocurrencies as a source of income for personal income tax. However, there is no specific provision in the new Income Tax Law that explicitly defines cryptocurrencies as taxable income (taxable income) for personal income tax; instead, it stipulates four types of taxable income: Income from Employment (Income from Employment), Income from Business (Income from Business), Income from Investment (Income from Investment), and Income from Other Sources (Income from Other Sources); only Cryptocurrency is used as a form of “Supplies of Digital Assets” (Supplies of Digital Assets), thereby constituting “Digital Services” (Digital Services). From this perspective, Bhutan is still cautious in terms of cryptocurrency taxation, and the specific regulations are still quite vague. What is certain, however, is that businesses providing services related to crypto assets will pay income tax at a rate of 22%. Additionally, it is worth noting that capital gains tax (Capital Gains Tax) is usually increased when cryptocurrencies are treated as property for tax purposes. By interpreting and applying the current income tax law, Bhutan may still tax relevant income as “investment income” or “income from other sources” based on the length of time the crypto asset is held and the nature of the transaction. As for goods and services tax, the new law does not explicitly stipulate whether cryptocurrency transactions are taxable

3 Bhutan

's regulatory framework for cryptocurrencies

3.1 The basic framework of the cryptocurrency regulatory system

Bhutan's regulatory system has gone through a shift from pilot to full promotion. Cryptocurrency regulation in Bhutan is mainly the responsibility of the Royal Monetary Authority (RMA) and implemented through the “Cryptocurrency Mining Regulatory Sandbox Framework” issued by the RMA in 2019, which emphasizes strict compliance supervision of crypto-related businesses. The framework aims to ensure that mining activities comply with national laws, protect investors and consumers, and support the application of innovative technology. More specifically, the framework requires cryptocurrency mining companies to comply with KYC and AML regulations and obtain various forms of RMA approval to prevent the misuse of cryptocurrencies for illegal activities and ensure that financial risks are not generated. In 2024, Bhutan further refined regulations, requiring crypto businesses operating in the country to obtain a license to conduct full risk disclosure to protect cryptocurrency investors. This framework emphasizes anti-money laundering and investor protection, not only in line with FATF standards, but also with global concerns about the safety and integrity of financial transactions

in the cryptocurrency sector.

3.2 Recent developments in the cryptocurrency regulatory regime

Bhutan has a positive and open attitude towards cryptocurrencies. It not only accepts cryptocurrencies, but also incorporates them into the national development strategy, in particular, establishing Bitcoin sovereign reserves, using its hydropower resources for green mining, and using it as a tool for economic diversification. In the process, Bhutan is constantly updating its cryptocurrency regulatory system.

According to the latest notice “RMA's Regulatory Stance on Crypto Currency” (RMA “s Regulatory Stance on Crypto Currency”) announced by the Royal Monetary Authority of Bhutan on May 30, 2025, the Royal Monetary Authority will adopt a phased and focused cryptocurrency regulatory strategy to support responsible innovation (Innovation Responsible) while protecting citizens' rights and financial stability. Based on this policy, while continuing to monitor developments in the field and strengthen national cryptocurrency capacity building, the RMA officially announced the following positions:

(1) Cryptocurrency mining and trading business can only be carried out by Glep Mindful City registered entities and cooperative enterprises, and must comply with

the GMC regulatory framework;

(2) Crypto transactions through domestic banks regulated by RMA

will continue to be restricted.

The latest regulations suggest that despite a number of restrictions, Bhutan's future policies may continue to support the development of cryptocurrencies. It should be noted that given Bhutan's famous “gross national happiness” concept,

its cryptocurrency policy is likely to remain cautious and emphasize investor protection, sustainability, and social benefits to balance economic innovation with financial stability.

4 International comparison

and future outlook

4.1 International comparison

A brief comparison of Bhutan with other countries focusing on cryptocurrency development reveals the following macro differences: First, in terms of the monetary system, El Salvador uses Bitcoin as the legal tender for the entire economic system to promote cryptocurrencies in a more legally enforceable manner. Bhutan has not declared any cryptocurrencies as legal tender, and has not disrupted the existing fiat currency system. Second, in terms of promotion, unlike Switzerland promoting blockchain through private innovation and market power, Bhutan is participating through national entities such as Druk Holding & Investments and DK Bank to integrate cryptocurrencies into the national development plan. This is in contrast to America's ongoing legislative push on crypto assets. Third, in terms of global positioning, the United Arab Emirates, the United States, etc. are working to establish themselves as a global crypto hub, but Bhutan's position is quite different. Instead of pursuing a central position in the world, its encryption strategy focuses on empowering local development goals — improving local regional connectivity, openness, and financial inclusiveness through the widespread adoption of crypto payment systems, thereby supporting

the development of the tourism industry.

Specifically, in terms of the details of the tax system, Bhutan's tax system is also quite characteristic. Bhutan's tax policy is relatively relaxed, allowing cost deductions, and adopting excessive progressive tax rates, reflecting its friendly attitude towards small and medium-sized investors. India, which also belongs to South Asia, levies a flat tax rate of 30% on cryptocurrency income and does not allow losses to be deducted from other income. The tax environment is relatively stricter. However, compared to European countries such as Portugal, which use tax incentives to attract cryptocurrency users, Bhutan does not provide extensive tax benefits. It focuses on providing local people with daily applications through merchant payments and digital tools, thereby promoting cryptocurrencies. At the same time, compared to the US, which is also an important holder of Bitcoin sovereignty, the US is relatively fine and transparent in cryptocurrency taxation and regulatory legislation, and has a clear position to maintain its leading position; Bhutan has no specific crypto taxes, but instead distributes cryptocurrency revenue into existing taxes and tax lines. The

regulatory framework is relatively simple and the regulatory position is cautious.

4.2 Future prospects

In terms of regulation, Bhutan's cryptocurrency regulatory system reflects the concept of combining prudence and open innovation. In particular, the regulatory system, which focuses on anti-money laundering and investor protection, is in line with the international community. However, the transparency of the regulatory system still needs to be improved, the details of the regulation still need to be improved, and there is some uncertainty. In particular, according to the latest announcement from the competent authorities, geographical restrictions and controls on related businesses will continue. In the future, Bhutan may become a global model for the green development of cryptocurrencies. Its policies will continue to support the development of cryptocurrencies

, and focus on capacity building, risk isolation, and sovereignty control, and regulatory details will be further optimized.

In terms of taxation, Bhutan's tax system is undergoing a period of transition. In recent years, Bhutan's personal income tax and corporate income tax adjustments reflect the government's balanced consideration of economic development and social equity, and the implementation of GST will further simplify the tax structure. Despite this, due to the lack of specific laws, regulations or guidelines, Bhutan's position on cryptocurrency taxation is still somewhat vague, and related tax matters are still in a grey area. In the future, Bhutan's tax policy may continue to develop in a more transparent and efficient direction, and in terms of cryptocurrency tax policy, it may remain the status quo for some time to come. On the one hand, this provides room for flexible handling of crypto-related tax issues, and on the other hand, it also brings uncertainty and risk to cryptocurrency taxation. We believe that a positive attitude towards cryptocurrencies will prompt Bhutan to form a relevant tax framework conducive to the development of the crypto industry as soon as possible.

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