- The Bank of Korea now officially dismissed Bitcoin as a foreign exchange reserve due to inherent risk and volatile nature.
- The decision was made amid growing global interest in national Bitcoin reserves, led by the U.S. and other countries.
The Bank of Korea (BOK) has officially rejected the idea of considering Bitcoin (BTC) in its foreign exchange reserves, mainly because of its volatile nature and liquidity concerns. In a response to an inquiry from lawmaker Cha Gyu-geum, the central bank stated, the central bank has confirmed that it had neither reviewed nor considered Bitcoin for reserves. This was revealed by a KoreanHerald, a reputable Korean media company.
“Bitcoin’s price volatility is very high,” the BOK emphasized, and also believe transaction cost will rise during market downturn. The central bank also made references to International Monetary Fund (IMF) guidelines, which requires any reserve asset to possesses massive liquidity, stability and credit ratings, which Bitcoin currency lacks.
Despite increasing global discussions on digital assets in national reserves, South Korea remains cautious. The stance contrasts with the United States, where President Donald Trump recently announced a strategic Bitcoin stockpile, fueling debates on its role in global finance.
Political Pressure Grows, But Central Bank Stays Resistant
The rejection comes amid rising political interest in crypto integration. Some lawmakers, especially from South Korea’s Democratic Party, have pushed for a national Bitcoin reserve. Crypto lobbyists have also urged the country to explore stablecoin-backed reserves to modernize its financial strategy.
However, the BOK has remained firm, stressing that foreign exchange reserves must be immediately usable. “Reserves should be available for immediate use whenever needed,” the bank stated, dismissing Bitcoin’s role as a reliable asset.
Prof. Yang Jun-seok of Catholic University of Korea echoed this sentiment, arguing that reserves should be proportional to trade currencies. “Unless major economies issue bonds in Bitcoin, its advantage as a reserve asset is limited,” he explained.
While political momentum builds, the BOK is unlikely to shift its stance unless global financial institutions, like the IMF, formally recognize crypto assets as viable reserves.
Global Trends: The Divide on Bitcoin as a Reserve Asset
South Korea’s caution aligns with the views of other major economies. The European Central Bank, the Swiss National Bank, and the Japanese government have all voiced skepticism about adding Bitcoin to reserves.
Meanwhile, the U.S. has taken a different approach. Trump’s executive order to stockpile Bitcoin has fueled speculation that more nations may follow. Brazil and the Czech Republic have also expressed interest in Bitcoin reserves, highlighting the growing divide in global financial policy.
Prof. Kang Tae-soo of KAIST Graduate School of Finance believes stablecoins may be a more viable option. “The U.S. is likely to leverage stablecoins rather than Bitcoin to maintain dollar hegemony. Whether the IMF will recognize stablecoins as reserves in the future is important,” he stated.
However, South Korea is taking a wait-and-see approach. With Bitcoin’s price currently fluctuating from $80,000 to $76,000 in just 30 days—the central bank remains unconvinced of its stability.
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