The Bank of Korea (BOK) has dismissed the possibility of adding Bitcoin to its foreign exchange reserves, citing concerns over the cryptocurrency’s high volatility and lack of adherence to international reserve asset criteria.
According to a report from local media outlet Yonhap, the central bank responded to a written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, stating that it has “neither discussed nor reviewed” the inclusion of Bitcoin in its reserves. Officials emphasized that a “cautious approach is needed” regarding the matter.
The BOK highlighted Bitcoin’s price instability as a significant risk, warning that transaction costs to convert Bitcoin into cash could skyrocket in times of market turmoil. Furthermore, the central bank noted that Bitcoin does not meet the International Monetary Fund’s (IMF) criteria for foreign exchange reserves, which require assets to demonstrate liquidity, stable market value, and an investment-grade credit rating.
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The discussion around national crypto reserves has gained momentum globally, particularly following the U.S. government’s recent decision to establish a Strategic Bitcoin Reserve. Some countries, such as Brazil and the Czech Republic, have expressed openness to exploring Bitcoin as part of their reserve assets. However, the BOK underscored that other major financial institutions, including the European Central Bank, the Swiss National Bank, and Japan’s financial authorities, share a similarly skeptical stance on Bitcoin’s viability as a reserve asset.
Despite increasing global interest in state-backed cryptocurrency reserves, South Korea’s central bank remains firm in its stance that Bitcoin’s volatility and regulatory uncertainty make it unsuitable for inclusion in the country’s foreign exchange holdings.
