A Country That Has Mined Bitcoin for 8 Years Establishes a Dedicated Crypto Bank
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A Country That Has Mined Bitcoin for 8 Years Establishes a Dedicated Crypto Bank
Bhutan’s Gelephu Mindfulness City aims to become a pioneering crypto-financial hub.
Navigating Web3 tides with focused insightsBy Boaz Sobrado
Translated by Luffy, Foresight News
“If you don’t know how to do it, just avoid it.”
Zheng YD, CEO of DK Bank, used this phrase to explain the root cause behind frequent banking service terminations faced by crypto enterprises. Located in Gelepu Mindfulness City—a newly built city in Bhutan—DK Bank is the country’s only licensed bank, founded specifically to serve crypto-related businesses shunned by other financial institutions.
“There has long been a massive supply gap in banking services for the crypto industry,” Zheng YD said on the podcast On The Margin. “At its core, cryptocurrencies emerged from decentralized protocols and inherently possess anonymity features. The banking sector generally lacks corresponding risk-control mechanisms—and even today, most institutions remain at a loss on how to address them.”
Regulated jointly by Bhutan’s Royal Monetary Authority, DK Bank sits at the heart of a unique financial experiment. Bhutan, a small Himalayan nation with fewer than one million residents, measures national progress not by GDP but by Gross National Happiness (GNH). Gelepu Mindfulness City (GMC), located in southern Bhutan, is a special administrative zone whose operators claim it operates under independent governance rules.
“GMC maintains full administrative, legislative, and judicial independence from mainland Bhutan,” said Jigdrel Singay, Director of the Gelepu Mindfulness City Administration and Head of FinTech Operations, describing this governance model as “one country, two systems.”
The target market is vast and chronically underserved by financial infrastructure. “South Asia has roughly 2 billion people—but no financial services hub, leaving a critical regional financial gateway vacant,” Singay said. He envisions GMC becoming South Asia’s equivalent of Hong Kong for China or Singapore for Southeast Asia—a regional financial services center.
Fiat and Stablecoins in One Account
DK Bank’s business positioning is exceptionally clear. Zheng YD noted that most banks claiming crypto support merely handle fiat transactions for crypto firms, while digital assets must still be custodied externally.
“These banks say, ‘We won’t close your account just because you’re a crypto business,’ but none of your crypto asset flows can go through their channels,” Zheng YD explained. “We aim to differentiate ourselves. We integrate fiat and crypto ecosystems, offering unified multi-currency accounts alongside crypto custody services. Users can manage stablecoins like USDT and USDC within the same bank account, just as they would USD, GBP, or EUR.”
According to project disclosures, the account supports nine fiat currencies and includes Bitcoin staking loans, plus bidirectional fiat–crypto exchange and deposit/withdrawal channels. Two major challenges hinder implementation. First is underlying architecture: traditional banks process transactions only during weekday business hours, whereas crypto markets operate 24/7. Zheng YD admitted integrating these two systems requires extremely difficult technical upgrades.
The second challenge is screening out bad actors—a reality Zheng YD does not shy away from. “We never deny that criminals exist in the crypto industry; every sector inevitably attracts some degree of noncompliant participants,” he said. “Therefore, the Gelepu City Administration and DK Bank jointly conduct risk screening at the user onboarding stage.” Risk controls extend far beyond account opening: “We monitor not only off-chain fund flows but also track complete on-chain transaction histories—scanning wallet addresses and verifying every inflow/outflow and counterparty.”
Zheng YD believes this niche warrants deep investment, grounded in his conviction that global financial services are gradually migrating from off-chain to on-chain infrastructures. “We believe global finance will continue shifting on-chain—and DK Bank aims to be the financial institution best prepared to embrace this transformation.”
Adopting Singaporean Law, Fast-Track Licensing Pathway
Gelepu City did not build its regulatory framework from scratch. “At the corporate governance level, we adopt Singaporean common law; our financial regulations align with those of Abu Dhabi Global Market (ADGM),” Singay explained. “We selected these two frameworks because they represent world-class standards with exceptionally high recognition among international investors.” Companies already holding licenses from Singapore, ADGM, or Hong Kong need not undergo full re-approval—they may instead enter via a fast-track licensing pathway.
External observers often worry simplified processes could weaken oversight. Singay clarified that acceleration applies solely to approval timelines—not regulatory rigor. To qualify for Gelepu City’s highest-tier zero corporate tax incentive, companies must maintain genuine operational presence. “We do not welcome shell companies with no physical office or staff,” Singay said. “Businesses must meet tangible operational requirements: hiring local Bhutanese employees, establishing physical office space, and providing proof of routine operating expenses. Key executives must also pass regulatory qualification reviews.”
Why Are Small Nations Building This Infrastructure Now?
Bhutan is not alone among small sovereign states pursuing this track. Xin Yan, CEO of sovereign crypto infrastructure firm Sign, has spent two years focused exclusively on this domain—shifting focus from individual crypto users to national governments, with Bhutan among its partner countries.
“Governments serve as gatekeepers to all real-world business, data, and assets,” Xin Yan stated on the podcast. “National decision-making is highly pragmatic: governments won’t chase Bitcoin or crypto hype blindly. Their sole priority is solving domestic development challenges.” He pointed to widespread external dependency risks: “Today’s mainstream global financial infrastructure is dominated by the U.S. and China. If geopolitical tensions restrict cooperation between them, allied nations’ financial systems face immediate disruption.”
Neo, founder of UR—the Swiss-licensed on-chain neobank—spoke bluntly about superficial Web3 models today. “Many Web2 and Web3 projects take shortcuts: issuing USDC stablecoins or launching payment cards, then calling themselves ‘digital banks.’ They look impressive, yet their underlying architecture remains unchanged.”
Neo explained that Switzerland’s Financial Market Supervisory Authority (FINMA) centers regulation on on-chain data. Regulators directly read blockchain ledgers to verify quarterly fund flows and holdings across wallets—using this data to assess compliance and issue subsequent operating licenses. Zheng YD confirmed DK Bank follows similar logic, simultaneously monitoring both on-chain wallet activity and fiat flows to safeguard Gelepu City’s financial integrity.
Mining Since 2018—and Hedging Bitcoin Risk
Bhutan’s crypto strategy is no ad hoc initiative. Its Bitcoin mining operations—powered by abundant hydropower—have been running for years. Singay said mining began in 2018; Zheng YD added: “Nationwide large-scale mining commenced in 2019—well before most countries even understood Bitcoin. Bhutan had already deeply engaged with the crypto ecosystem.” Singay attributes this to long-term national foresight: “Our industry experience speaks for itself—we were early pioneers.”
Both leaders refuse to stake national development on any single crypto asset. When asked whether Bhutan plans to launch a native cryptocurrency akin to the Trump Token, Singay emphasized institutional-grade crypto verticals: mining, custody, asset management, and prime brokerage. “Speculative retail tokens hold no strategic interest for Gelepu City.”
Asked how Bhutan would respond if Bitcoin prices collapsed and remained depressed long-term, Zheng YD answered with banker’s risk discipline: “Banks must anticipate all potential risks—even extreme scenarios theoretically possible. So, what if Bitcoin plunges deeply? How do we respond?” His solution: diversification—not overreliance on Bitcoin. “Blockchain is foundational technology; Bitcoin is just one application. We prioritize Bitcoin—but also actively invest in stablecoins, tokenized real-world assets, and other blockchain sectors.”
Project rollout faces strict timing constraints. The critically important international airport—managed by Singapore Changi Airport Group and master-planned by renowned architecture firm Bjarke Ingels Group (BIG)—is scheduled for completion in December 2029. Meanwhile, the digital nomad visa targeting overseas remote workers remains in testing phase, per Zheng YD. This new city—designed around harmonious coexistence between humans and nature—offers foreign nationals zero personal income tax and monthly rents of just $400–$500. Yet currently, only finalized architectural blueprints and DK Bank’s operational launch exist.
Whether this crypto bank delivers value hinges on an industry-wide question. Wojciech Kaszycki, founder of digital asset firm Mobilum, articulated the necessity of sovereign crypto infrastructure clearly: “I believe every nation should establish its own domestic digital asset reserve authority.”
Zheng YD offered a gentle, firsthand illustration of why small nations benefit from crypto finance. “When I first visited Bhutan, the capital city had only one traffic light,” he recalled. “It wasn’t due to low vehicle density—the country’s car ownership rate is actually quite high. But people voluntarily yield and move orderly, needing no traffic lights to regulate flow. During congestion, everyone waits quietly—no honking. In today’s increasingly chaotic global environment, this spirit of tolerance and restraint is precisely what the global finance industry urgently needs.” While most countries ignored blockchain entirely, Bhutan launched Bitcoin mining. Today, this Himalayan nation goes further—building its own compliant, sovereign crypto bank.
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