Key Takeaways
- The Bank of Korea has ruled out Bitcoin as a foreign exchange reserve.
- Officials cite extreme volatility and lack of liquidity as key concerns.
- South Korea may lift its ban on institutional digital asset investments.
Despite growing global discussions on Bitcoin as a reserve asset, South Korea’s central bank has made it clear that it has no plans to include Bitcoin in its reserves.
When asked by Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee whether the bank had considered the idea, officials responded that it had “neither discussed nor reviewed” the possibility.
Concerns over Bitcoin’s volatility
The Bank of Korea (BoK) pointed to Bitcoin’s extreme price fluctuations, noting that its value recently swung between $76,000 and $108,000 before stabilizing at $84,000.
The central bank warned that during market instability, the cost of converting Bitcoin into cash could increase significantly, making it an unreliable financial asset.
Alignment with International Standards
The BoK’s stance aligns with the International Monetary Fund (IMF), which requires reserve assets to be liquid, marketable, and have investment-grade credit ratings—criteria Bitcoin does not meet.
Other major institutions, including the European Central Bank and Swiss National Bank, have also dismissed Bitcoin as a reserve asset.
Alternative approaches by other nations
However, some nations have taken a different approach.
The Czech Republic and Brazil have explored holding Bitcoin in national reserves, and the U.S. has accumulated a Strategic Bitcoin Reserve from confiscated assets.
South Korea’s digital asset initiatives
While rejecting Bitcoin as a reserve, South Korea remains active in the digital asset space.
The country is reportedly considering lifting a ban on institutional digital asset investments, allowing corporations to trade Bitcoin.
Additionally, the government is exploring the possibility of launching a won-backed stablecoin.
