The Bank of Korea (BOK) has firmly dismissed the idea of incorporating Bitcoin into its foreign exchange reserves, citing concerns over extreme price volatility and transaction risks. The announcement comes amid global discussions on the role of cryptocurrencies in central bank reserves, following the United States’ decision to create a strategic Bitcoin reserve.
Responding to an inquiry from a member of the National Assembly’s Strategy and Finance Committee, BOK officials ruled out the possibility of adding Bitcoin to South Korea’s reserve assets. The central bank emphasized that Bitcoin’s unpredictable price fluctuations make it an unsuitable reserve asset, warning that transaction costs could rise drastically during market instability.
“As of March 17, Bitcoin trades around $83,500, a sharp 23% decline from its peak of $108,000 in January. This extreme volatility poses significant risks to our reserves,” the BOK stated.
The central bank also noted that Bitcoin does not meet the International Monetary Fund’s (IMF) criteria for reserve assets, which emphasize liquidity, market stability, and credit risk management. “Bitcoin’s characteristics do not align with the prudent asset management principles outlined by the IMF,” the BOK clarified.
This marks the first time South Korea’s central bank has directly addressed the potential of using Bitcoin as a reserve asset. Despite a growing global conversation around Bitcoin’s role in financial reserves, the BOK stressed a cautious approach toward the cryptocurrency.
The rejection comes at a time when countries worldwide are reconsidering their stance on digital assets. Earlier in March, U.S. President Donald Trump signed an executive order to establish a strategic Bitcoin reserve, sparking discussions in South Korea and other Asian nations about adopting a similar approach.
However, the BOK’s firm stance underscores its priority of financial stability over speculative asset accumulation. While South Korea has been a hub for cryptocurrency trading and innovation, its central bank remains reluctant to embrace Bitcoin as a reserve asset, reinforcing a conservative monetary strategy.
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