Bhutan, the third largest BTC sovereign holder: An overview of crypto taxation and regulation

In recent years, Bhutan, leveraging its geographical advantages in hydropower and a state-driven strategic development model, has continuously built Bitcoin mining farms, sparking a "green mining revolution." According to data released by Arkham Intel on June 27, 2025, the country has accumulated 12,062 Bitcoins since 2020, making it the world's third-largest sovereign Bitcoin holder. 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 globally. In July 2025, Bhutan launched a nationwide cryptocurrency payment system, allowing tourists to use cryptocurrencies to pay for visa fees, flights, and local goods, becoming one of the first countries to enable crypto payments across its entire tourism ecosystem. Binance CEO Richard Tang wrote to Bhutan, acknowledging that Bhutan is forging a path of cryptocurrency innovation and paving its national vision with trust. However, in stark contrast to Bhutan's rapidly booming cryptocurrency industry, the country's somewhat crude and nascent cryptocurrency tax and regulatory system remains in its infancy. 2. Bhutan's Characterization of Cryptocurrencies and Basic Tax Policies 2.1 Characterization of Cryptocurrencies Bhutan maintains a cautious approach to cryptocurrencies, not treating them as legal tender but as assets subject to regulatory restrictions. But this does not prevent Bhutan from becoming increasingly open to crypto assets. In particular, in January 2025, Bhutan's special administrative region, Gelephu Mindfulness City (GMC), announced plans to include Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) in its strategic reserve framework (at the regional level). This is a pioneering attempt, and the legal and implementation details are still being promoted. This means that Bhutan's characterization of cryptocurrencies has gone beyond ordinary commodities or property, elevating them to the level of national strategic reserve assets. 2.2 Basic Tax Policies and Their International Comparisons 2.2.1 Overview of Bhutan's Tax System Bhutan's tax system modernization process started relatively late. Starting in the 1960s, the government gradually introduced monetized taxation. The Income Tax Act of 2001 established a modern comprehensive income tax system covering personal and corporate taxes, while the Sales Tax, Customs and Excise Duty Act of 2000 regulated the collection of indirect taxes. Currently, Bhutan's tax system mainly includes personal income tax, corporate income tax, sales tax, and customs and excise taxes. It has recently passed the Income Tax Bill of Bhutan 2025 (hereinafter referred to as the "Income Tax Act") and the Goods and Services Tax Bill of Bhutan. 2025 (hereinafter referred to as the "Goods and Services Tax Act") to further modernize the tax system. Currently, sales tax, customs, and excise duties are implemented under the Sales Tax, Customs and Excise Act, 2000, with specific tax rates announced by the Ministry of Finance (the sales tax is currently 7%). However, Bhutan plans to implement a 5% Goods and Services Tax (GST) to replace the existing sales tax from January 2026. As the new law will take effect on January 1, 2026, this article will focus on the new law. 2.2.2 Personal Income Tax Bhutan's personal income tax is based on progressive tax rates, ranging from 0% to 30%, applicable to citizens, residents, and other individuals with income in Bhutan with an annual income exceeding 300,000 Ngulthams. The 2025 Income Tax Act merged the previous personal income tax (PIT) and business income tax (BIT) into the personal income tax to simplify the tax structure. Under the new law, the specific personal income tax rates for each level are as follows: 2.2.3 Corporate Income Tax ... Presence). Under the new Income Tax Act, the tax rate is 22%, down from the previous 30%, aimed at attracting investment and supporting business development. 2.2.4 Sales Tax and the Upcoming Goods and Services Tax (GST) Currently, Bhutan's sales tax rate is 7%, applicable 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 with international standards. 2.3 Cryptocurrency Tax Policy and Latest Developments Bhutan does not have specific tax provisions specifically for Bitcoin or other cryptocurrencies. While the country participates in cryptocurrency mining and supports digital infrastructure, it does not consider cryptocurrencies legal tender and does not provide specific tax exemptions. Under Bhutan's current tax legislation, the occurrence of potentially taxable events related to cryptocurrencies - such as generating income from cryptocurrency mining, investment or trading (sale or exchange), or receiving cryptocurrencies as payment for goods or services, or even simply holding digital assets - may result in the application of existing taxes. When the Income Tax Law was revised in 2024, Bhutan's mainstream media reported that according to relevant officials from the Department of Revenue and Customs, the revision of the Income Tax Law will consider digital assets such as cryptocurrencies as a source of income for personal income tax. However, the new Income Tax Law does not contain specific provisions that explicitly define cryptocurrencies as taxable income for personal income tax. Instead of defining income as income, the new law specifies four types of taxable income: income from employment, income from business, income from investment, and income from other sources. Cryptocurrency is considered solely as a form of "supplies of digital assets," thus constituting "digital services." This suggests that Bhutan remains cautious regarding cryptocurrency taxation, with the specific regulations remaining vague. However, it is certain that businesses providing crypto-related services will be subject to a 22% income tax rate. Furthermore, it is worth noting that capital gains tax is generally imposed when cryptocurrencies are considered property for tax purposes. By interpreting and applying the existing income tax law, Bhutan may still tax related gains as "investment income" or "income from other sources," depending on the duration of holding the crypto assets and the nature of the transactions. Regarding the Goods and Services Tax, the new law does not explicitly stipulate whether cryptocurrency transactions are taxable. leaf="">3. Bhutan’s regulatory framework for cryptocurrencies

3.1 Basic framework of the cryptocurrency regulatory system

In terms of regulation, Bhutan's cryptocurrency regulatory system reflects a philosophy that combines prudence with open innovation. In particular, the regulatory system focused on anti-money laundering and investor protection is in line with international standards. However, the transparency of the regulatory system still needs to be improved, and the regulatory details still need to be perfected, resulting in certain uncertainties. In particular, according to the latest announcement of 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 cryptocurrency. Its policies will continue to support the development of cryptocurrency and focus on capacity building, risk isolation and sovereign control. Regulatory details will also be further optimized.