Author: Boaz Sobrado
Compilation: Luffy, Foresight News
"If you don't know how to do it, just avoid it."
DK Bank CEO Zheng YD used this phrase to explain the root cause of crypto enterprises frequently facing banking service disconnections. Located in Bhutan's newly built Gyalpo Mindfulness City, and also the only licensed bank in the area, it was established precisely to undertake the crypto business that other financial institutions shun.
"There has long been a huge supply gap in banking services for the crypto industry," Zheng YD said on the *On The Margin* podcast. "The root cause is that cryptocurrencies were born from decentralized protocols with inherent anonymity. The banking industry generally lacks corresponding risk control methods. To this day, the vast majority of institutions still don't know where to start."
DK Bank is jointly regulated by the Royal Monetary Authority of Bhutan and is at the core of a unique financial experiment. Bhutan is a small Himalayan nation with a population of less than a million. Compared to GDP, Gross National Happiness is this country's signature development indicator. Gyalpo Mindfulness City (GMC for short) is a special administrative zone in southern Bhutan. The project operator claims this area has independent governance rules.
"The new city is independent from mainland Bhutan in terms of administration, legislation, and judiciary," said Jigdrel Singay, Director of the Gyalpo Mindfulness City Authority and Head of Fintech Operations. He describes this governance model as "one country, two systems."
They are targeting a vast market that has long lacked supporting financial services. "South Asia has about 2 billion people, yet there is no financial services hub, equivalent to a gap in the region's financial gateway," Singay said. He hopes GMC can become South Asia's financial service center, much like Hong Kong is for China and Singapore is for Southeast Asia.
Fiat and Stablecoins in One Account
DK Bank's business positioning is very clear. Zheng YD stated that most banks claiming to support cryptocurrencies are only willing to handle the fiat business of crypto companies, with digital assets still needing to be custodied on external platforms.
"These banks will only say they won't close your account because you're a crypto business, but all your crypto asset flows cannot go through their channels," Zheng YD said. "We want to be different. We bridge the fiat and crypto asset systems, offering integrated multi-currency accounts and crypto custody services. Users can manage stablecoins like USDT and USDC in the same bank account, just like managing US dollars, British pounds, or Euros."
According to disclosed project information, the account supports 9 fiat currencies, along with Bitcoin pledge lending, and two-way fiat-to-crypto asset exchange and on/off-ramp channels. Implementation presents two major challenges. The first is the underlying architecture: traditional banks only batch-process business on weekdays from 9 to 5, whereas the crypto market operates 24/7 with real-time trading. Zheng YD admitted that bridging these two systems requires a highly difficult technical upgrade.
The second challenge is intercepting bad actors. Zheng YD did not shy away from industry issues. "We never deny there are bad actors in the crypto industry. Any industry will breed a certain proportion of non-compliant participants," he said. "Therefore, the Gyalpo New City Authority and DK Bank collaborate to complete risk screening from the user admission stage." Risk control doesn't stop at account opening: "We don't just monitor off-chain fund flows; we also track complete on-chain trajectories, scan wallet addresses, and verify every inflow, outflow, and counterparty information."
Zheng YD believes this track is worth pursuing, with the core judgment being that global financial services are gradually moving from off-chain to on-chain. "We believe global financial services will continue migrating on-chain. DK Bank aims to be the financial institution fully prepared to welcome this transformation."
Adopting Singapore Law, Opening Fast-Track Licensing Channel
Gyalpo New City did not build a regulatory system from scratch. "For corporate governance, we adopt Singapore common law; financial regulatory rules benchmark the Abu Dhabi Global Market (ADGM)," Singay explained. "The reason for choosing these two systems is that they are both globally top-tier standards with extremely high recognition among international investors." Companies that have already obtained licenses in Singapore, ADGM, or Hong Kong can operate here without going through the full approval process again, utilizing a fast-track channel.
There are widespread concerns that simplifying the process will weaken oversight. Singay clarified: the speed-up only applies to the approval process; regulatory standards will not be relaxed. Companies wanting to enjoy the new city's highest zero corporate income tax preferential policy must have a genuine operational entity. "We do not welcome companies that only register shell companies with empty offices," Singay said. "Companies need to meet physical operation requirements: hire local Bhutanese employees, establish a physical office space, and provide proof of daily operational expenses. Core position leaders of the company must also pass qualification review by regulatory bodies."
Why Are Small Countries Building This Infrastructure Now?
Bhutan is not the only small sovereign state focusing on this track. Xin Yan, CEO of Sign, a sovereign crypto infrastructure company, has been in this field for two years, shifting his clientele from crypto users to national governments, with Bhutan being one of his partner countries.
"Governments are the gatekeepers for all business, data, and assets in the real world," Xin Yan mentioned on the podcast. "Government decisions are very pragmatic. They won't blindly chase Bitcoin or crypto concepts for their own sake. The core demand is only one: to solve their own development challenges." He pointed out that countries generally face risks of external dependence. "The current mainstream global financial infrastructure is dominated by China and the US. Once these two countries restrict cooperation for geopolitical reasons, the financial systems of related countries will suffer."
Neo, founder of the Swiss-licensed on-chain neo-bank UR, bluntly stated that many Web3 projects today have superficial models. "Nowadays, both Web2 and Web3 industries are taking shortcuts: issuing USDC stablecoins, launching payment cards, and calling themselves digital banks. It looks glamorous, but the underlying architecture hasn't undergone substantive change."
Neo explained that the Swiss Financial Market Supervisory Authority (FINMA) focuses its regulatory approach on on-chain data. The regulator directly reads the blockchain, checks quarterly fund flows and holdings of various wallet addresses, and uses this to determine whether a company is compliant and to issue the next stage of operating licenses. Zheng YD stated that DK Bank adopts a similar regulatory logic, simultaneously monitoring on-chain wallet flows and fiat funds to safeguard the entire new city's financial security.
Mining Since 2018 and Hedging Bitcoin Risk
Bhutan's crypto plan was not a spur-of-the-moment idea; Bitcoin mining operations leveraging hydropower resources have been running for years. Singay said mining operations started in 2018, with Zheng YD adding, "National-scale mining began in 2019. Long before most countries understood Bitcoin, Bhutan was already deeply engaged with the crypto ecosystem." Singay attributed this to the country's long-term strategic vision. "Our industry experience is the best proof. We are early pioneers in the industry."
Both leaders were unwilling to bet the country's development on a single crypto asset. When asked if Bhutan would launch a native cryptocurrency similar to Trump's token, Singay said the focus is on institutional-grade, full-crypto industry chain: mining, custody, asset management, and prime brokerage business. "Speculative tokens targeting retail investors, at least Gyalpo New City will not proactively pursue them."
When asked how to respond if Bitcoin's price plummets and fails to recover for a long time, Zheng YD answered with a banker's risk-control mindset: "Running a bank requires anticipating all kinds of risks. Theoretically, extreme market conditions are all possible. If Bitcoin experiences a deep decline, how do we respond?" His solution is diversified deployment, not relying solely on Bitcoin: "Blockchain is the underlying technology; Bitcoin is just one application built on it. We focus on Bitcoin, but we are also developing other blockchain tracks like stablecoins and real-world asset tokenization."
Project implementation is constrained by time cycles. The crucial international airport mentioned by Singay will be managed by the operator of Singapore's Changi Airport, with overall planning by the renowned architectural firm Bjarke Ingels Group (BIG), and is expected to be completed by December 2029. The digital nomad visa for overseas remote workers, Zheng YD said, is still in the testing phase. This newly planned city emphasizing coexistence between humans and nature exempts foreign nationals from personal income tax, with monthly rents as low as $400 to $500, but currently, there are only complete planning blueprints and DK Bank in operation.
Whether this crypto bank can create value depends on an industry-wide issue. Wojciech Kaszycki, founder of the digital asset company Mobilum, explicitly stated the necessity of sovereign crypto infrastructure: "I believe every country should establish its own local digital asset reserve institution."
Zheng YD used a personal anecdote to gently explain the value of small countries deploying crypto finance. "When I first visited Bhutan, the entire capital city had only one traffic light," he said. "It wasn't due to a lack of vehicles; the local car ownership is not low. But the people are polite and orderly; they don't need traffic lights to guide traffic. During traffic jams, everyone waits quietly without honking. In today's increasingly chaotic global environment, this inclusive and restrained mindset is precisely the quality urgently needed in the global financial industry." While most countries were still ignoring blockchain technology, Bhutan had already started Bitcoin mining; now, this small Himalayan nation has gone a step further, creating its own dedicated, compliant crypto bank.
