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Bhutan’s Crypto Reserve Could Pave Way for Economic Growth in Other Countries
Bhutan, a small country in South Asia, is making big waves in the crypto world.
The Kingdom, which populates roughly 770,000 people and lies between India, China and Nepal, just made headlines after one of its cities adopted a crypto reserve strategy. This includes bitcoin (BTC), ethereum (ETH), and Binance’s BNB token (BNB).
El Salvador has previously made bitcoin part of the country’s national reserve and several other countries, including the United States, are considering taking similar measures to strengthen its already robust economy.
But Bhutan could set an example for smaller countries, where making crypto part of their national reserve strategy could have an enormous economic impact.
“They are coming out guns loaded to show the world what’s possible in the digital asset space by bringing in foreign companies to help take advantage of the growing global interest in crypto as a whole,” said Phillip Shoemaker, executive director of Identity.com, a non-profit organization providing decentralized identity verification.
“I see this move as potentially triggering similar actions among other governments around the world, especially in smaller countries that are subject to the whims of foreign-exchange volatility and geo-political uncertainty,” he said.
According to a report by the World Bank in May this year, although Bhutan does have a fairly robust economy, downside risks persist as the country’s fiscal deficit is expected to widen. To ensure economic growth, it needs to attract more foreign investments, the report suggested.
Bhutan listened and acted by creating Gelephu Mindfulness City, the region that is adopting crypto as part of its goal of “mindfulness, sustainability, and innovation.”
“The special economic zone being created helps to attract foreign investment, so its accumulation of digital assets more generally could be really compelling at the international level,” Shoemaker said.
Bhutan was already well positioned for this move. The country has an estimated 24,000 megawatts of technically feasible hydropower potential, of which it has so far only developed about 7%.
“It gets so much electricity from hydro sources, after all, and it makes sense for them to lean into the mining aspect of it,” said Shoemaker.
Bitcoin mining requires enormous energy which has sparked concerns about the negative environmental impact of crypto mining. However, use of hydropower solves that problem as it is much more cost efficient and reduces miners’ carbon footprint.
In April 2019, the country started using its massive amounts of hydropower to start mining bitcoin, according to an article by Forbes. Today, the country owns over 11,000 bitcoin, worth roughly $1.1 billion, according to data on Arkham. This puts Bhutan among the top five countries to hold bitcoin in its reserves, according to BitcoinTreasuries data.
“Bitcoin mining, in particular, is such a good tool for leveraging various forms of renewable and stranded energy,” said Jagdeep Sidhu, Core Developer at Syscoin and President of the Syscoin Foundation. “I imagine that other governments are increasingly looking at Bhutan as an example of how to launch their own Bitcoin reserves, especially countries that have abundant sources of energy that could otherwise be wasted.”
Shares of Nasdaq-listed cryptocurrency exchange Coinbase (COIN) rose 43% this month, making the firm the top performer in the S&P 500 since it joined the index at the end of last month.
June’s run is already the stock’s best since November and caps three straight monthly gains. Coinbase’s shares reached their highest level since their public debut.
COIN hit a $382 high this week before enduring a slight correction, ending the week at $353 and seeing a slight 0.7% drop in after-hours trading to $351.
The wider S&P 500 index rose roughly 5% in June as geopolitical tensions eased.
Washington’s progress on the GENIUS Act, Congress’s first rulebook for dollar-pegged stablecoins, helped shift investor focus from trading fees to stablecoin revenue.
The bill brightened the outlook for Circle, whose shares hit a record high and saw its market cap near that of Coinbase this week.
Coinbase keeps all yield on USDC balances held on its platform and nearly half of other USDC income, equal to about 99 percent of Circle’s revenue, giving shareholders indirect exposure at no added cost, CNBC reported Friday, citing analysts including Citizens’ head of financial technology research Devin Ryan.
Trading, however, remains subdued. Average daily volume on Coinbase has drifted lower since April.
Robinhood (HOOD) has introduced micro futures on bitcoin (BTC), solana (SOL) and XRP in the United States., expanding its existing crypto futures offering for its nearly 26 million funded accounts.
Micro contracts need far less collateral than full-size futures, letting traders take directional positions while committing a smaller slice of capital.
The contracts offer traders more flexibility to bet on a cryptocurrency’s future price direction or hedge current positions given their smaller size.
The launch rounds out a futures suite that began with BTC and ETH in January. It also comes weeks after the firm closed its $200 million purchase of Bitstamp and finalized a $179 million deal for Canada’s WonderFi.
Robinhood’s data shows that crypto notional volumes have exploded upward over time, reaching $11.7 billion in May. The figure marks a 36% rise month-over-month, and a 65% growth year-over-year.
XRP climbed 5.5% to $2.19 in the last 24 hours after a trio of catalysts converged to help the cryptocurrency outperform the wider cryptocurrency market.
One of the catalysts was launch of XRP micro futures on Robinhood. The contracts offer traders more flexibility to bet on the cryptocurrency’s future price direction or hedge current positions given their smaller size.
Regulatory fog also thinned. On Friday, Ripple withdrew its cross-appeal in its long-running U.S. Securities and Exchange Commission (SEC) lawsuit. The SEC sued Ripple back in 2020 over its XRP sales, alleging these violated securities laws. The SEC is expected to drop its own appeal, leaving last year’s ruling, ordering Ripple to pay a $125 million civil penalty to the SEC, intact. The move could lift a lid that had kept some investors on the sidelines.
On-chain data rounded out the bullish setup. The XRP Ledger logged over a 1.1 million active addresses over the past week according to crypto analyst Ali Martinez, who cited Glassnode data.
XRP’s rise saw it outperform the wider crypto market, with the broader CoinDesk 20 (CD20) index rising 1.7% in the last 24 hours.
Coinbase Outpaces S&P 500 With 43% June Rise as Stablecoin Narrative Grows: CNBC
Robinhood Launches Micro Bitcoin, Solana and XRP Futures Contracts
Why is XRP Up Today? Trio of Catalysts Sees Token Outperform Wider Crypto Market
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