According to Forbes, the Kingdom of Bhutan, the tiny Himalayan kingdom known for its focus on Gross National Happiness, has quietly invested millions of dollars in cryptocurrencies like Bitcoin and Ether.

Per a Forbes report published on April 15, the country’s sovereign investment arm, Druk Holding & Investments, has been revealed to be a customer of bankrupt crypto lenders BlockFi and Celsius, which it has never publicly disclosed. According to court documents reviewed by Forbes, Druk withdrew over $65 million and deposited nearly $18 million in digital assets in the three months shown in the Celsius filing. The report raises questions about the reclusive nation’s relationship with the volatile crypto economy.

Forbes also reported that Druk Holding & Investments was established in 2007 through a royal charter from King Jigme Khesar Namgyel Wangchuck to safeguard the country’s wealth for the long-term benefit of its shareholders, the people of Bhutan. It manages a portfolio of homegrown assets, including a local cheesemaker, several hydropower plants, and Royal Bhutan Airlines. Today, it oversees 21 domestic companies.

Forbes’s report says that while Bhutan’s investment of tens of millions of dollars in crypto may seem unusual for a holding company meant to promote domestic ventures, it appears to be the first sovereign wealth fund to directly own crypto. Wealth managers have speculated for several years that government-backed funds are beginning to buy up cryptocurrency. The report notes that the Norwegian Government Pension Fund, the world’s largest sovereign wealth fund, is a shareholder of business intelligence firm MicroStrategy, whose massive Bitcoin holdings meant that the fund incidentally owned 600 Bitcoin as of 2020.

On September 22, 2021, FinTech firm Ripple announced a partnership with Bhutan’s central bank (aka “Royal Monetary Authority”) with the aim of the latter using Ripple’s CBDC solution to pilot a central bank digital currency (CBDC) in phases.

As you may remember, on March 3, 2021, Ripple announced via a blog post that it was “piloting” a private version of the open-source public XRP Ledger (XRPL) to allow central banks to create and manage their digital currencies. The XRP Ledger was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and XRP is the native currency of the XRP Ledger.

Ripple mentioned that this new initiative, which builds on top of the country’s payments infrastructure and capabilities, will tap use Ripple’s CBDC solution to “support seamless retail, cross-border and wholesale payment use cases for a digital Ngultrum.”

Ripple said that the RMA “believes that easier, faster, and more affordable payments, both domestically and internationally, will help it reach its goal of increasing financial inclusion by 85% by 2023.”

Ripple’s “commitment to sustainability was important for Bhutan.” As Ripple pointed out, its CBDC solution is “carbon-neutral and, because it’s based on the public XRP Ledger, is 120,000x more energy efficient than proof-of-work blockchains.”

The disclosure of Druk’s secret crypto portfolio has raised questions about the reclusive nation’s relationship with the turbulent crypto economy. Bhutan’s investment in crypto also raises questions about how other sovereign wealth funds may be investing in crypto and whether more of them will follow Bhutan’s lead.