No Immediate Plans for Bitcoin Reserves
The Bank of Korea (BOK) has clarified that it has not reviewed or discussed the possibility of including Bitcoin (BTC) in its foreign exchange reserves, citing concerns over high volatility and liquidity risks.
In response to a March 16 written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, officials from South Korea’s central bank stated that a cautious approach is necessary when considering Bitcoin as part of national reserves.(according to the Korea Herald.)
The BOK emphasized that Bitcoin’s price volatility remains too high, making it unsuitable as a reserve asset. Officials also warned that instability in the cryptocurrency market could lead to a sharp increase in transaction costs when liquidating Bitcoin holdings.
Bitcoin’s Volatility and Market Fluctuations
Bitcoin has experienced significant price swings over the past 30 days, fluctuating between $98,000 and $76,000, before stabilizing at around $83,000—a 15% decline since mid-February.
Such volatility has led the BOK to conclude that Bitcoin does not currently meet the criteria required for foreign exchange reserves, which must be highly liquid, readily accessible, and hold an investment-grade credit rating.
Global Push for Crypto Reserves and South Korea’s Position
The BOK’s statement comes amid growing global discussions on the role of cryptocurrencies in national financial strategies. Earlier this month, U.S. President Donald Trump signed an executive order establishing a strategic Bitcoin reserve, sparking worldwide debate.
On March 6, at a crypto policy seminar, industry representatives and members of South Korea’s Democratic Party urged the government to consider adding Bitcoin to its national reserves and explore the development of a won-backed stablecoin.
However, the BOK remains skeptical, arguing that foreign exchange reserves should reflect the currencies of key trading partners and prioritize assets with established credibility and stability.
Expert Opinions on Bitcoin and Stablecoins as Reserve Assets
Professor Yang Jun-seok of Catholic University of Korea supported the BOK’s stance, stating that it is appropriate for foreign exchange reserves to be held in proportion to the currencies of key trading partners rather than highly volatile assets like Bitcoin.
Meanwhile, Professor Kang Tae-soo of KAIST Graduate School of Finance suggested that the U.S. is more likely to use stablecoins than Bitcoin to maintain the dominance of the dollar. He also noted that the International Monetary Fund (IMF)’s stance on recognizing stablecoins as foreign exchange reserves could be a crucial factor in global adoption.
South Korea’s Potential Shift in Crypto Policy
Despite the BOK’s reluctance, South Korea’s financial regulators are closely monitoring global crypto trends. Earlier this month, authorities examined Japan’s Financial Services Agency (FSA) legislative trends regarding digital assets, as they consider lifting the country’s ban on cryptocurrency exchange-traded funds (ETFs).
While South Korea remains hesitant about integrating Bitcoin into its reserves, its approach to digital asset regulations is gradually evolving, with potential policy shifts on the horizon.
Conclusion
The Bank of Korea has reaffirmed its cautious stance on Bitcoin reserves, prioritizing stability, liquidity, and investment-grade credit ratings in its foreign exchange policy.
As global interest in Bitcoin as a reserve asset grows, South Korea continues to observe international developments while balancing innovation with financial prudence. The future of digital assets in national reserves and financial policy will depend on shifting regulatory landscapes and institutional acceptance worldwide.
