Bhutan Launches Sovereign Gold-Backed Digital Token

(MENAFN- The Arabian Post)

Bhutan has entered the digital asset arena with the rollout of a sovereign gold-backed token built on the Solana blockchain, marking a cautious but notable step by the Himalayan kingdom into tokenised finance. The initiative, unveiled on Thursday, aligns with Bhutan's long-standing emphasis on economic stability and social well-being, while testing how blockchain technology can be used to modernise public finance without undermining monetary discipline.

The token is designed to be fully backed by physical gold held under state custody, according to officials familiar with the programme. By anchoring the digital asset to a traditional store of value, the authorities aim to distinguish it from volatile cryptocurrencies and position it closer to a digital commodity instrument that can be used for settlement, savings and, potentially, cross-border transactions. The launch places Bhutan among a small group of sovereigns experimenting with asset-backed tokens rather than central bank digital currencies.

Initial statements from policymakers indicate that the project is being overseen by state investment entities in coordination with monetary authorities, with an emphasis on limited issuance and controlled circulation during the early phase. The token is not being framed as legal tender, nor as a replacement for the ngultrum, but as a complementary digital instrument that could support reserves management and financial innovation. Officials have stressed that convertibility into physical gold under defined conditions is central to the design.

Choosing Solana as the underlying blockchain reflects a focus on transaction speed and cost efficiency. Solana has gained traction among governments and institutions exploring tokenisation due to its high throughput and relatively low fees compared with older networks. Developers involved in the Bhutan project have highlighted that the network's performance allows real-time settlement and on-chain transparency, features considered important for a state-backed asset that must withstand public scrutiny.

See also Crypto Laundromats Exposed by ICIJ

Bhutan's move builds on a broader pattern of experimentation with digital infrastructure. Over the past few years, state-linked entities have explored blockchain applications ranging from digital identity to sustainable finance, while also engaging in Bitcoin mining powered by hydropower. The gold-backed token, however, represents a shift from operational experimentation to a product directly linked to sovereign assets, raising questions about governance, custody and oversight.

Economists following the project say the gold backing is likely intended to mitigate risks that have plagued unbacked digital tokens, including price instability and loss of confidence. By tying issuance to verifiable reserves, Bhutan is signalling a conservative approach that mirrors elements of commodity-backed monetary systems, albeit implemented through distributed ledger technology. Analysts note that this structure could appeal to users seeking exposure to gold in digital form without relying on private issuers.

The authorities have indicated that the initial use cases will be narrow, potentially focused on institutional settlement and pilot programmes with regulated financial entities. Broader retail access, if any, would depend on regulatory assessments and technical performance. This staged approach reflects awareness of the reputational and financial risks associated with sovereign digital assets, particularly for a small economy with limited tolerance for systemic shocks.

Regionally, the launch is being watched by policymakers and technologists across Asia, where governments are weighing different models for digital assets. While several central banks are testing retail and wholesale digital currencies, asset-backed tokens remain less common at the sovereign level. Bhutan's experiment could provide data on whether such instruments can coexist with existing monetary frameworks without encouraging speculative behaviour.

See also Taiwan to Test Bitcoin as Strategic Asset with Pilot Program

Gold market specialists point out that tokenisation could improve liquidity and accessibility for state-held bullion, though it also introduces operational complexities. Secure custody, regular audits and clear redemption rules are essential to maintain credibility. Any perception of opacity could undermine confidence not only in the token but also in the broader financial system. Bhutanese officials have acknowledged these concerns and said robust verification mechanisms are being incorporated from the outset.

Arabian Post – Crypto News Network

Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.

MENAFN12122025000152002308ID1110473460