The Bhutanese Leading the way.
In parallel session at Bhutan Innovation Forum, experts delved into the transformative potential of decentralized finance (DeFi) for entrepreneurs in Bhutan, particularly in rural areas where access to traditional banking services is limited.
DeFi, which leverages blockchain technology to facilitate peer-to-peer transactions, presents an innovative solution to the financial challenges faced by local businesses, allowing them to operate without the constraints of middlemen.
One of the standout advantages of DeFi is its ability to enhance funding access. Entrepreneurs can utilize smart contracts to lend and borrow directly from one another, opening avenues for small businesses that often struggle to secure loans from conventional institutions.
Yves Bennaim, founder and Chair of 2B4CH shared that this shift could empower Bhutanese entrepreneurs to explore new business models and engage with global markets more effectively. As highlighted in the discussion, an El Salvador case exemplifies this, where a coffee farmer successfully marketed products internationally using Bitcoin. He said that DeFi creates new opportunities because customers also ask for new services.
Bennaim said, “Bitcoin transactions can now be made via SMS on basic mobile phones, increasing access to financial products. This shift allows intermediaries to focus on advanced services. While it may disrupt current systems, it’s considered beneficial, especially for people in Bhutan, who will have greater access to international markets.”
Moreover, DeFi has the potential to significantly reduce transaction costs. Traditional international money transfers involve multiple intermediaries, each deducting fees. By cutting out these middlemen, DeFi allows for faster and cheaper transactions, which could enhance trade and investment opportunities within Bhutan’s economy.
Aung Kyaw Moe, founder and CEO of 2C2P, spoke about the shift towards faster transactions and the diminishing role of intermediaries in the financial landscape.
“In Southeast Asia, where I operate, we’re seeing agreements between nations, such as the GDG Highlander, facilitating cross-border fund transfers and reducing the need for middlemen like myself,” Moe said. He emphasized that this evolution is being accelerated by emerging technologies, particularly Blockchain.
“For countries like Bhutan, innovators can leverage Blockchain to leapfrog into advanced financial systems. This will not only benefit internal designs but also enable the nation to prosper on a global scale,” he added.
The panel emphasized that embracing DeFi requires a cultural shift among entrepreneurs. The adoption of digital currencies and blockchain technology—such as stablecoins that minimize price volatility—could facilitate everyday transactions and broaden access to international markets.
However, the transition to DeFi is not without challenges. While DeFi democratizes financial services, it also presents risks such as smart contract vulnerabilities and market volatility. Education and awareness are essential for users to navigate these complexities safely.
Moreover, as regulators ramp up efforts to ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) standards, it’s crucial to strike a balance that protects consumers without stifling innovation.
The future of finance may indeed be decentralized, and Bhutan is well-positioned to capitalize on these emerging opportunities, paving the way for a more inclusive and accessible financial landscape.
