Bank of Korea to Adopt a Cautious Stance on Bitcoin Reserve
South Korea’s central bank has not yet discussed or reviewed the possibility of holding Bitcoin as a foreign exchange reserve, despite increasing pressure from lawmakers and crypto advocates.
The Bank of Korea stated that it is approaching the idea with caution, citing concerns over Bitcoin’s high volatility.
In a March 16 response to a written inquiry, central bank officials clarified that they have “neither discussed nor reviewed” adding Bitcoin to foreign exchange reserves. They emphasized that a “cautious approach is needed,” as reported by the Korea Herald.
“Bitcoin’s price volatility is extremely high,” the central bank stated, adding that during periods of market instability, transaction costs for liquidating Bitcoin could surge significantly.
Over the past month, Bitcoin prices have fluctuated between $98,000 and $76,000 before settling at around $83,000, marking a 15% drop since Feb. 16, according to CoinGecko.
The announcement comes amid growing global discussions on integrating crypto into national financial strategies, spurred by U.S. President Donald Trump’s recent executive order to establish a strategic Bitcoin reserve and digital asset stockpile.
During a March 6 seminar, crypto industry lobbyists and some members of Korea’s Democratic Party urged the government to consider adding Bitcoin to national reserves and to develop a won-backed stablecoin.
However, the Bank of Korea reiterated that foreign exchange reserves must have high liquidity and be readily available when needed, with a credit rating of investment grade or higher criteria that Bitcoin does not currently meet.
Professor Yang Jun-seok of the Catholic University of Korea supported this stance, stating that foreign exchange reserves should be aligned with the currencies of key trade partners.
Meanwhile, Professor Kang Tae-soo of KAIST’s Graduate School of Finance noted that the U.S. is more likely to use stablecoins than Bitcoin to maintain dollar hegemony.
He also pointed out that the potential recognition of stablecoins as foreign exchange reserves by the IMF could be a critical factor in the future.
Additionally, South Korea’s financial regulator is monitoring Japan’s Financial Services Agency’s evolving stance on crypto assets, as it considers lifting a ban on crypto exchange-traded funds (ETFs) in the country.
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