In May 2026, BTSE Bhutan received in-principle approval from the Gelephu Financial Services Office for two activities: operating a multilateral trading facility for virtual assets, and providing institutional-grade custody. It was reported as the first exchange approval in GMC. Read the phrase carefully. In-principle approval is not a licence. It is a conditional statement that the regulator is prepared to license the firm once it has built what it described. What sits on either side of that moment is the whole of exchange licensing in GMC.
In short
- An exchange applies not for one activity but for a stack: operating a multilateral or organised trading facility, providing custody, and usually dealing as principal, dealing as agent and money services.
- The perimeter is marked by an exclusion: a facility that merely transmits orders without letting buying and selling interests interact is not operating a trading facility.
- The published route runs in seven steps, with in-principle approval at step five and pre-conditions before the licence is granted.
- Those pre-conditions are incorporation, a bank account, capital, an office and staff. They are the expensive part.
- Senior executive officer, compliance officer and money laundering reporting officer are mandatory appointments held by approved persons resident in GMC or Bhutan, subject to waiver.
- Firms already licensed in Singapore, Abu Dhabi Global Market or Hong Kong get accelerated review under the May 2026 fast-track. It is expressly not passporting.
- Capital levels and fees are set by the regulator, not by the Act.
Start with the activity stack, not the licence
Founders ask whether GMC licenses crypto exchanges. The statute does not think in those terms. The Financial Services Act 2025 lists specified kinds of activity in its first schedule, and a firm needs permission for each it carries on by way of business. An exchange typically touches several at once.
Operating a multilateral trading facility or organised trading facility. This is the core. It covers a multilateral trading facility on which financial instruments, virtual assets or spot commodities are traded, an organised trading facility on which financial instruments are traded, and ancillary activities the regulator considers suitable for the facility to conduct. Virtual assets appear in the operative text: GMC does not reach digital asset trading by arguing that tokens are securities.
Providing custody. Safeguarding financial instruments, virtual assets or spot commodities belonging to another is a specified activity, as is administering those assets and acting as a central securities depository. Any exchange holding client coin is in this activity. A companion activity covers arranging custody where it is outsourced.
Dealing in investments as principal and as agent. If the venue takes the other side of a trade, runs a market making book or executes as agent for clients, those are separate specified activities that must be in the permission.
Providing money services. Fiat on and off ramps, payment services and money transmission engage this activity. Issuing a fiat-referenced token is distinct and specified in its own right, which matters if the venue plans its own stablecoin.
Map your order flow, custody model and settlement rails against that list before the first meeting with the regulator, and apply for the permissions you will need in year two as well as year one. Changing the scope later is possible under the general rulebook, but it is an application, not a notification.
Know where the perimeter is
Every regulated regime has an edge, and in market infrastructure the edge is the order routing exclusion. Under the Financial Services Act 2025, a person does not operate a multilateral trading facility if it is merely an order routing system where buying and selling interests in, or orders for, financial instruments, virtual assets or spot commodities are merely transmitted but do not interact. The same applies to an organised trading facility in relation to financial instruments.
That sentence decides a lot of business models. A smart order router, an aggregator passing orders to third party venues, or a front end that sends a client instruction onward may fall outside the activity, provided interests do not interact on the system. The moment your system matches, or creates the conditions in which orders meet, you are operating a facility.
The schedule contains other exclusions that matter to an exchange group: dealings with or through licensed firms, arrangements that do not cause a deal, introducing, activities in the course of a profession, groups and joint enterprises, and non-GMC persons. Perimeter work is cheap compared with licensing the wrong entity.
The seven steps to in-principle approval
The Gelephu Financial Services Office publishes its application process. It follows a familiar sequence.
- Contact the regulator and hold an initial meeting. Not a formality: the regulator forms an early view of whether the business belongs in GMC.
- Present the business model. Order flow, client types, custody architecture, jurisdictions served and group structure.
- Submit the application forms and pay the non-refundable fee.
- Regulator review, with possible interviews. Expect the proposed senior executive officer, compliance officer and money laundering reporting officer to be interviewed.
- In-principle approval, with pre-conditions.
- Satisfy the pre-conditions: incorporation, bank account, capital, office, staff.
- Issue of the Financial Services Licence.
BTSE's May 2026 announcement sits at step five: in-principle approval for two named activities, conditional on satisfying pre-conditions before it could begin operating. An in-principle approval tells you the regulator accepts the model. It does not tell you the venue is live, and a firm that treats it as a licence in its marketing creates a problem under the Act's provisions on misleading statements and impressions.
The pre-conditions are the expensive part
Step six is where the money goes.
Incorporation. A GMC company is formed through the Gelephu Corporate Registration Office. An expression of interest is assessed for business case and alignment with GMC's priority industries, a corporate service provider must be engaged, documents are filed, the fee is paid and a certificate and unique entity number are issued. The registry estimates about a week once a complete document set is in.
Office. Under the general rulebook, a licensed firm that is a body corporate incorporated in GMC must have both its head office and its registered office in GMC. The regulator judges head office case by case, looking to where directors and senior management sit and to the main location of day-to-day operational and control arrangements. A firm that fails on this point alone will not be considered fit and proper. The Companies Act separately requires a registered office in GMC from incorporation; the registry has confirmed the earlier waiver ended on 30 April 2026.
Bank account. The May 2026 fast-track brought banking into the same pathway, with corporate accounts at DK Bank covering nine currencies including US dollars, fiat to crypto rails and bitcoin-backed lending, and fees waived initially then discounted.
Capital. Prudential requirements are set by the regulator through the prudential rulebook and scaled to the activities in your permission. Ask early, because capital drives your funding timetable.
Staff. See below. People are usually the long pole.
Approved persons and mandatory appointments
The framework regulates individuals as well as firms, through controlled functions and approved person status. A licensed firm must make and maintain the following appointments, each held by an approved person at all times: a senior executive officer, a finance officer for banks and insurers, a compliance officer and a money laundering reporting officer. Variations apply to credit rating agencies and venture capital fund managers.
Two features shape recruitment. First, the senior executive officer, compliance officer and money laundering reporting officer must be resident in GMC or Bhutan. The regulator may waive residence for the latter two, deciding case by case by reference to the nature, scale and complexity of the business and the firm's compliance arrangements. Second, the senior executive officer is defined by responsibility rather than title: an individual with ultimate responsibility for the day-to-day management, supervision and control of the firm's regulated activities carried on in or from GMC, who is a director, partner or senior manager.
The general rulebook also deals with one individual holding more than one controlled function, temporary cover, and changes to or withdrawal of approved person status. Plan for a named, credible senior executive officer who will relocate. That hire moves an application more than any legal drafting.
The rulebooks you are signing up to
GMC applies rulebooks derived from an established international financial centre's framework through the Application of Laws Act 2024, progressively adapted and enacted as GMC law. For an exchange the relevant set is the general rulebook, anti-money laundering and sanctions, conduct of business, market infrastructure and prudential, with the fund rules if the group runs collective investment products. Virtual asset guidance sits alongside them.
The general rulebook is the one you live in daily. It contains twelve principles for licensed firms and principles for approved persons; requirements on management, systems and controls, the allocation of significant responsibilities and whistleblowing; disclosure of regulatory status, close links and location of offices; accounting and auditing obligations; complaints handling; and the notification, waiver and change of control machinery. Changes in control are a regulatory event in themselves, which matters to any exchange planning a funding round.
The fast-track, and what it is not
In May 2026 GMC announced an accelerated pathway for firms already licensed in Singapore, Abu Dhabi Global Market or Hong Kong, combining incorporation, regulatory approval and corporate banking into one route. Jigdrel Singay, a GMC board member and its digital assets lead, framed it as recognising credibility already demonstrated in leading jurisdictions.
It is not passporting. GMC said expressly that firms must still comply with its own regulatory standards and supervision, and that a foreign licence simplifies due diligence without substituting for local review. The benefit is evidential: your existing regulatory file, fit and proper assessments, compliance manuals and audited accounts carry weight, so steps three and four move faster. Step six does not shorten. Incorporation, capital, office and resident staff take the time they take.
Frequently asked questions
What licence does a crypto exchange need in GMC?
Not one licence but a permission covering several specified activities: operating a multilateral trading facility on which virtual assets are traded, providing custody, and depending on the model dealing as principal, dealing as agent and providing money services.
Is an in-principle approval a licence?
No. It is a conditional decision issued at step five, subject to pre-conditions that include incorporation, a bank account, capital, an office and staff. The licence is issued only when those are satisfied.
How much capital do I need?
The Act does not state a figure. Prudential requirements are set by the regulator through the prudential rulebook and scaled to the activities in the permission.
Am I regulated if I only route orders to other venues?
Possibly not. The Act excludes a facility that is merely an order routing system where interests or orders are transmitted and do not interact. Whether your system matches is a question of architecture, to be answered before you build.
The bottom line
Exchange licensing in GMC is conventional in shape and unusually clear in its foundations, because virtual assets are named in the primary statute rather than reached by analogy, and because one regulator supervises all of it. The seven-step route is not the hard part. Step six is: a real office, real capital, a real bank account and three named senior individuals who will live in Gelephu. A Singapore, Abu Dhabi Global Market or Hong Kong licence speeds the review, not the build. BTSE Bhutan's in-principle approval shows the path exists and shows exactly where it pauses.
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer-client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
Sources
- Acts: Financial Services Act 2025 (Law No. 5 of 2025), Schedule 1 Part 1 para 3, Part 2 paras 4, 12, 16, 43, 44, 46, 52, 53, 53B, 54, 55, Part 3, Part 9 of the Act, Schedule 2; Companies Act 2025 (Law No. 1 of 2025), ss. 19, 142, 143, 145, 171; Application of Laws Act 2024 (Law No. 1 of 2024), s. 5 and Schedule B; GEN Rulebook 2026, 2.2, 3.2, 3.3, 3.4, 4.4, 4.5, 4.6, 5.2, 5.3, 5.5, 5.6, 6.2, 6.4, 8.3, 8.8, 8.10
- GCRO FAQ for GMCA Entities, version 0.2, 3 June 2026
