By Roshan Aslam
Pro-crypto sentiments are gathering pace among both retail and institutionalised investors globally. From the introductions of Bitcoin ETFs to supportive measures promised by top political figures, it’s indicating a new dawn for virtual digital assets (VDAs). Governmental participation in cryptocurrencies, especially Bitcoin, is transforming how retail investors perceive these assets and set their risk appetites.
The supportive measures by authorities are not only limited to investing but also taking a proactive stance to supplement mass adoption. A similar measure can be witnessed in Bitcoin as the Kingdom of Bhutan has emerged as a key player in this space.
A recent report by a prominent public data application firm has revealed that the Government of Bhutan holds over 13,000 Bitcoins that are presently valued at over $780 million. This significant wealth makes the small Himalayan nation the fourth largest governmental accumulation of the new-age asset, sparking curiosity over whether governmental participation can boost Bitcoin adoption rates.
Presently, Bhutan boasts a little over 38,000 crypto users with a penetration rate of 4.88 per cent in 2024, a figure that is estimated to increase by 0.04 per cent by next year. This rate is comparable to that of the United Kingdom with 6.2 per cent in a population that holds a significant edge in technology exposure. However, Bhutan’s significant Bitcoin accumulation by Druk Holding and Investments, the governmental investment arm, ushers faith for a rapid adoption rate by users — a fact that has been validated in key geographies around the world.
What's The Significance?
The unregulated nature of any cryptocurrency, including Bitcoin, means that anyone can accumulate them. However, world governments have had an adversarial outlook on cryptocurrencies since the last decade, meaning participation in the VDA markets has remained limited and stagnant among institutional and retail investors.
Furthermore, demographical data from around the world has suggested that cryptocurrencies have been adopted largely by the young population, only a small part of the overall population. While adoption rates have only increased thereafter, adding individuals irrespective of age or gender, governmental participation is now offering a fresh outlook to boost the adoption rates.
Latest estimates suggest that 560 million crypto investors are present across the world, with an adoption rate of 6.9 per cent. The United Arab Emirates leads this space with an adoption rate of 25.3 per cent, compared to 15.5 per cent in the US, 13.6 per cent in South Korea and 8.3 per cent in Germany.
The mutual thread that binds all of these nations is the technological exposure to the citizens, while many of these governments still do not have robust crypto legislation present. Meanwhile, Bhutan, a country of less than a million and technologically far less exposed, holds an adoption rate of 4.88 per cent — highlighting the importance of governmental participation to bolster adoption rates.
According to the Bhutanese Ministry of Finance, the kingdom imported computer chips worth over $140 million in 2022 marking almost 1/10th of the nation’s total imports and almost 15 per cent of the country’s annual budget. This figure was up from $51 in 2021 and $1.1 million in 2020 — a clear indicator of an upward trend in the country’s bid to become one of the major players in the domain.
Scenarios Around The World
While world governments have been late at identifying the potential of cryptocurrencies, most of them have addressed it by now. In India, the Government is actively engaged in creating a Crypto Bill, whereas in the US, a similar bill has been approved by the House of Representatives.
In Asia, several governmental initiatives are driving the adoption rate forward that is being highlighted by the UAE (25.3 per cent), Singapore (24.4 per cent), Thailand (17.5 per cent), Vietnam (17.4 per cent), Saudi Arabia (15 per cent), Malaysia (14.3 per cent), Hong Kong (14.3 per cent), Indonesia (13.9 per cent), South Korea (13.6 per cent), The Philippines (10.6 per cent) and others.
The United States (15.56 per cent), China (4.15 per cent) and the UK (5.74 per cent) make up the top three world governments that have accumulated the most number of Bitcoins so far, however, the fascinating factor in the list comes in as the fourth-placed Bhutan for obvious reasons. However, it also clears the fact that governmental participation is highly proportional to Bitcoin and larger crypto adoption in nations, an aspect that will have a significant role to play in the coming years.
As Bitcoin investors are looking forward to becoming part of the world’s largest cryptocurrency’s next bull run, increased participation from different world governments will also lead to significant inflows and a rapid transformation of digital assets while enhancing the overall market capitalisation. With a market capitalisation of $1.27 trillion in October 2024, governmental participation is estimated to not only strengthen the future but also ensure a sustainable growth of the ecosystem leading to Bitcoin becoming a mainstream asset.
(The author is the Co-founder and CEO of GoSats)
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