Bhutan's Crypto Investment Surprises the World
By Anton Kryshtal 689 29 May 2023
Bhutan, one of the world's most isolated countries, has been actively investing millions of dollars in cryptocurrency, as indicated by court documents from BlockFi and Celsius.
It is worth noting that the Bhutanese government has long been leveraging its national investment firm, Druk Holding & Investments (DHI), to participate in cryptocurrency initiatives. Managing assets of $2.9 billion and having stakes in a range of economic sectors, such as aviation, energy, and local manufacturing, DHI's status allows it to form high-level partnerships. In 2021, the firm announced a collaboration with Ripple to launch a Central Bank Digital Currency (CBDC), and recently, DHI teamed up with Bitdeer to set up a $500 million fund for organizing cryptocurrency mining. Despite its agrarian economy and modest technical advancement, the nation is evidently examining this field, but no one anticipated direct investments.
Nevertheless, DHI appears to have employed lending platforms like BlockFi and Celsius for covert purchases of digital assets. It was only the bankruptcy of these cryptocurrency ventures that brought these investments to light. This strategy might stir up resentment among Bhutanese citizens, given that the firm's primary goal was supposed to be investing solely in domestic businesses, not in elusive digital assets. To date, Bhutanese authorities have not commented on these findings.
BlockFi has kept quiet, but from the available documents, it is evident that the company lodged a complaint against DHI for refusing to pay back an earlier loan ($30 million in USDC). Consequently, the creditor was forced to liquidate the collateral, taking a hit of $1 million, a loss that will likely remain uncompensated. In regards to this situation, DHI's CEO, Ujjwal Deep Dahal, briefly commented, without going into case specifics:
From Celsius' viewpoint, there have so far been no grievances lodged against DHI, which has interacted regularly with the platform for the acquisition, trading, and lending of cryptocurrency over the previous trimester. During this period, the firm deposited $18 million, extracted over $65 million, and refrained from elucidating these transfers.
Thus, it is currently shrouded in mystery as to whether DHI genuinely initiated a national cryptocurrency fund for direct procurement of digital assets, or if this is simply a financial subterfuge orchestrated by the governmental upper echelon. Regardless, this scenario could represent a pivotal precedent worldwide, potentially spurring other nations to follow suit with similar investments.