Bhutan has leveraged its hydroelectric resources and state-driven development strategy to establish itself as a leader in sustainable Bitcoin mining. According to Arkham Intel's June 27, 2025 report, the country has accumulated 12,062 BTC since 2020, making it the world’s third-largest sovereign Bitcoin holder. These reserves account for approximately 40% of Bhutan’s GDP, positioning it among the nations with the highest cryptocurrency exposure.

In July 2025, Bhutan launched a national crypto payment system, enabling tourists to use digital assets for visas, flights, and local purchases—a pioneering move in travel-sector crypto adoption. Binance CEO Richard Tang praised Bhutan for its innovative approach, though its rapid crypto growth contrasts with underdeveloped tax and regulatory frameworks.

**Cryptocurrency Classification & Tax Policies** Bhutan treats crypto as a regulated asset rather than legal tender, but openness has grown. In January 2025, the special administrative zone Gelephu Mindfulness City (GMC) proposed including BTC, ETH, and BNB in its strategic reserves—a landmark initiative pending legal refinement.

**Tax Framework Modernization** Bhutan’s tax system, modernized since the 2000s, includes income, corporate, and sales taxes. The 2025 Income Tax Act merged personal and business taxes, with progressive rates (0%-30%). Corporate tax was cut from 30% to 22% to spur investment. A 5% GST will replace the 7% sales tax in 2026.

**Crypto Taxation Ambiguity** No specific crypto tax laws exist. Mining, trading, or accepting crypto as payment may trigger existing tax liabilities. The 2024 Income Tax Act revisions considered crypto as taxable income but left rules vague, potentially classifying gains as "investment" or "other" income.

**Regulatory Evolution** The Royal Monetary Authority (RMA) oversees crypto under its 2019 mining sandbox framework, enforcing KYC/AML compliance. A May 2025 update restricted crypto mining and trading to GMC-registered entities, maintaining banking limitations. Bhutan balances innovation with caution, aligning with its Gross National Happiness ethos.

**Global Comparisons** Unlike El Salvador’s Bitcoin legal tender status or Switzerland’s private-sector blockchain push, Bhutan integrates crypto via state entities like Druk Holding & Investments. Its tax policies are milder than India’s 30% flat crypto tax but lack Portugal’s incentives.

**Outlook** Bhutan’s hybrid regulatory approach—prioritizing AML and investor protection—may set a global standard for green crypto development. Tax clarity remains pending, though GST implementation could streamline compliance. As the nation refines its frameworks, it aims to harness crypto for tourism and financial inclusion without compromising stability.