Bhutan government fund invests in cryptocurrencies
The investment department of the Kingdom of Bhutan invested in crypto assets (virtual currency) on a scale of several billion yen. This was revealed by the bankruptcy filings of BlockFi, a cryptocurrency lending company, and Celsius. Forbes reported on the 15th.
Investing in cryptocurrencies was Druk Holding & Investments (DHI), a sovereign wealth fund established in 2007 by royal charter of the King of Bhutan. A 390 billion yen ($2.9 billion) government investment arm that holds hydropower plants and Bhutanese companies such as Royal Bhutan Airlines in its portfolio.
Using BlockFi and Celsius
DHI received approximately ¥4 billion ($30 million) in loans from BlockFi in the form of USDC stablecoins, according to documents sent to DHI in March by a lawyer for the bankrupt BlockFi.
What is a stablecoin
A cryptocurrency whose price is always stable. Stablecoins are a type of cryptocurrency, and unlike BTC, ETH, and XRP, which have volatility, their purpose is to maintain their value ($1) backed by the US dollar. In addition to US dollar-backed stablecoins (USDT/USDC), there are also stablecoins that use algorithms.
BlockFi liquidated the bitcoin (BTC) deposited by DHI as collateral, but said it still has an outstanding balance of about 110 million yen ($820,000). The document called for this balance to be repaid to BlockFi.
DHI CEO Ujjwal Deep Dahal told Forbes that “the problem with BlockFi has been resolved.” He declined to comment further, citing confidentiality.
DHI was also a customer of Celsius. Celsius just filed for Chapter 11 bankruptcy last year. Then, in October, it released a document listing user account names, addresses, transactions, and more. You can also check your DHI account here.
Between April and June 2022, DHI accounts saw a number of transactions including deposits, withdrawals and borrowings of Bitcoin, Ethereum (ETH), USDT and other cryptocurrencies. It is a form of withdrawing more than about 8.7 billion yen ($65 million) in virtual currency and depositing nearly 2.4 billion yen ($18 million).
Bhutan is a Buddhist kingdom located in the Himalayas. Most of the land is mountainous, and nature is spreading. In 2013, it was ranked eighth in the United Nations’ World Happiness Rankings. The population as of 2021 is about 780,000.
Partnering with Ripple on CBDC
Bhutan’s central bank has partnered with Ripple to launch its central bank digital currency (CBDC) in 2021.
Ripple’s ledger “CBDC Private Ledger” will be introduced to Bhutan’s payment infrastructure, and experiments will be conducted on payments between companies, individuals, banks, and international remittances. The purpose is to increase efficiency through digital payments and accelerate financial inclusion.
connection: Ripple to pilot Central Bank Digital Currency (CBDC) with Kingdom of Bhutan
Trends in sovereign wealth funds
Although there are still few sovereign wealth funds that directly own cryptocurrencies like the sovereign wealth fund in Bhutan, the number of sovereign wealth funds that invest in Web3 and Metaverse is increasing.
For example, South Korean sovereign wealth funds are investing in US Silicon Valley startups in 2022, increasing their exposure to Metaverse, AI (artificial intelligence), and more.
connection: South Korean sovereign wealth fund with scale of 23 trillion yen to make large-scale investments in the Metaverse field, etc.
Meanwhile, Singaporean sovereign wealth fund Temasek is leading a ¥13.4 billion ($100 million) funding round for Hong Kong’s Web3 giant Animoka Brands.
connection: Web3 major Animoca Brands raises 13.8 billion yen in a round led by Singapore’s sovereign wealth fund