Despite growing political pressure and global adoption trends, the Bank of Korea (BOK) reiterates that Bitcoin’s volatility and liquidity risks make it unsuitable for foreign reserves
South Korea’s central bank has dismissed the possibility of adding Bitcoin to its foreign exchange reserves, despite increasing global discussions on the role of cryptocurrencies in national financial strategies.
On March 16, local media outlet Yonhap reported that the Bank of Korea (BOK) responded to a written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, stating that it had “neither reviewed nor discussed” the inclusion of Bitcoin in its reserves.
The bank said “Bitcoin’s price volatility is very high,” pointing to this and its lack of an investment-grade credit rating as key reasons for its exclusion.
“In cases of cryptocurrency market instability, transaction costs to cash out Bitcoins could rise drastically,” the bank stated.
Officials further emphasized that Bitcoin does not meet the International Monetary Fund’s liquidity and credit quality requirements for foreign exchange reserves.
Worldwide positions on creating strategic Bitcoin reserves are mixed
The response comes as a growing number of countries explore the idea of integrating Bitcoin into their financial systems.
The U.S. recently established a strategic Bitcoin reserve, while nations like Brazil and the Czech Republic have signaled openness to holding digital assets.
However, the BOK remains aligned with institutions such as the European Central Bank and the Swiss National Bank in maintaining a cautious stance toward Bitcoin as a reserve asset.
Despite the central bank’s firm rejection, the debate over Bitcoin’s role in South Korea’s financial landscape is intensifying.
According to The Korea Herald, members of Korea’s Democratic Party and crypto industry advocates urged policymakers to consider Bitcoin reserves and a potential won-backed stablecoin during a policy seminar on March 6.
The Korea Exchange is also considering allowing crypto-based exchange-traded funds (ETFs), as the Japanese news portal Nikkei reported last February.
Meanwhile, the South Korean Financial Services Commission (FSC) has taken steps toward lifting the ban on institutional crypto trading and is working on a regulatory framework for stablecoins, as it announced on 13 Feb.
While the Bank of Korea remains firm in its stance, growing political and industry interest suggests the conversation around Bitcoin reserves in South Korea is far from over.
